The Port Authority of New York and New Jersey (“PANYNJ”) had invested $40 million in stabilizing and renovating the landmarked TWA Terminal, which was designed by Eero Saarinen and opened in 1962 at the beginning of the Jet Age. The building had been unused since 2001, and the PANYNJ wanted to form a public/private partnership to reactivate this historically important structure and preserve their investments in the building’s exterior and interior. As such the PANYNJ engaged RESGroup to evaluate the market potential for the adaptive re-use of the property as a hotel. Focus was given to the property’s on-airport location, excellent access to the City’s mass transit network via the Airtrain, and the potential for meetings, events, and conferences at the redeveloped facility.
A two-step RFQ/RFP process was utilized to better understand the restoration capabilities of each potential development team. The RFQ was marketed to number of national developers and hotel operators to attract high quality proposals. The RFP was sent to the approved developers and they were asked for a detailed proposal, identifying the hotel concept, providing renderings, explaining the management approach, estimating the hotel’s financial performance, and proposing a financial offer to the PANYNJ. RESGroup reviewed the proposals, assisted in the selection of finalists, and assisted in negotiations with the selected developer to enter into a 75-year ground lease.
A significant challenge for the hotel developer was the PANJNY’s underlying lease with the City of New York to own and operate the airport, which had only 30 years remaining. RESGroup analysis concluded that the developer’s ability to obtain debt and equity financing would be significantly limited unless the hotel ground lease with the PANYNJ had a term significantly longer than the underlying lease. Ultimately, RESGroup encouraged the PANYNJ and the City of New York to execute an Agreement to Enter Into Lease (“ATEIL”), where the City of New York would accept the terms of the hotel developer’s ground lease with the PANYNJ should the City not renew the PANYNJ’s lease in 30 years.
MCR Development was selected as the hotel developer for the project, and the TWA Hotel opened in May, 2019. The hotel has 512 guest rooms, 50,000 square feet of meeting space, 6 restaurants and 8 bars, a 10,000 square foot fitness facility, a rooftop observation deck with swimming pool, and a museum dedicated to the Jet Age, TWA, and the mid-century modern design movement.
