The Beaux Art bank building, built in 1912, went through a decade-long renovation before re-opening in 2022.
Photo: Google Maps

When Nine Orchard opened in 2022, it was yet another sign of Dimes Square’s arrival or demise, depending on whom you asked. The always-gentrifying yet still sort-of-scrappy neighborhood at the border of Chinatown and the Lower East Side was getting an elegant, meticulously curated luxury hotel in the old Jarmulowsky Bank Building with prices starting at $475 a night, dining overseen by Ignacio Mattos of Estela, and rooms with warm cookies at turndown service and seasonal postcards drawn by Leanne Shapton. It was also a turning point for the building itself, which had been vacant for years. There was talk of it being office space, a residential space, and an ACE Hotel, but the ACE didn’t pan out and office space, according to Nick Farmakis, a vice-president at commercial brokerage Savills, was a nonstarter in the neighborhood after COVID. He pointed to Essex Crossing nearby, a mixed-use development that has struggled to find office tenants — a huge chunk was leased by Verizon, which never moved in and has been looking to sublease ever since, and other spaces are still vacant. Given Nine Orchard’s location in the center of Dimes Square, a hotel was the obvious move.

Whatever minor hand-wringing the opening of the 113-room hotel may have caused, it’s been widely embraced in the few years since opening. It turned out that 20- and 30-somethings with a lot of time on their hands and some money to burn loved hanging out at Corner Bar and the Swan Room, the hotel’s dining and drinking establishments, and the historic Beaux-Arts bank building, filled with faux old-world décor, also drew its fair share of tourists. Emily Adams Bode Aujla and her husband, Aaron, breakfasted there; Tom Holland launched a nonalcoholic beer with Zendaya by his side; Ryan McGinley and Michael Stipe appeared in conversation. There were readings, live jazz, and dance parties on the roof. It was, by all appearances, a buzzy spot, although at some point Mattos stopped being associated with the dining program.

So when news of the hotel’s sale broke last week, it seemed like DLJ Real Estate Capital Partners, which bought the building and the site next door for  $41 million in 2012 ($36 million for the bank and $5.3 million for an electronics outlet it knocked down next door), had made a killing. The buyer, the Austin-based restaurant and hospitality firm MML Hospitality, headed by chefs Larry McGuire and Tom Moorman, paid $92 million, according to city records. (New York Business Journal previously reported the original purchase price to be $5.3 million, making the sale seem even more eye-popping, although that was just for part of the parcel.) But also, it seemed to confirm that the real-estate values in Dimes Square are rising exponentially, especially since the pandemic.

In recent weeks, there have been more shifts indicating a larger transformation in the  neighborhood: the nearby A&N Fruit Store, a beloved smoothie bodega known for its watermelon slushies and giant snowmen, announced that it was closing in October after 15 years because the building’s new owners had asked them and other tenants at 23 Canal, including Shan Fu Grocery, to leave. As the Lo-Down reported last week, nearby 3-5 Essex Street, which was also owned by DJL until last year, is also slated for some changes, as the city finally approved the demolition of 3 Essex, which was destabilized a while ago by construction next door.

But the sale of Nine Orchard doesn’t actually appear to be the slam dunk it first seemed. The sale includes the restaurants, which weren’t around when DLJ bought the building, and would naturally raise the deal’s overall value. Emily Sundberg, on her Substack, also pointed out that April Bloomfield, who was reportedly doing consulting for Nine Orchard this spring, is now the executive chef of MML Hospitality, which owns Rosie’s and Sammie’s in the West Village, as well as restaurants in Aspen, Austin, Montecito, Houston, and a hotel in New Orleans. And the hotel’s renovation, a process that involved restoring the façade of the landmarked building, rebuilding the cupola and the spire, and converting it into a hotel, cost $300 million, according to Studio Castellano, the architecture firm that oversaw the work.

Adelaide Polsinelli, a commercial-real-estate agent at Compass, pointed out that, whatever the details are, the hotel traded for a high price for the neighborhood — it works out to $1,289 per square foot, with properties that sold nearby recently going for $446 and $700 per square foot. Still, there haven’t been many recent transactions in the neighborhood and none of such a large and lavishly renovated building, so there really aren’t relevant sales to compare it to. Hotels also typically trade for more, since not only the real estate but the business, with restaurants and bars (and liquor licenses), is being sold. Two years ago, the Sixty SoHo Hotel, at 58 Thompson Street, sold for $1.1 million per room, and that same year the Mondrian in Midtown East sold for $665,000 per room. Nine Orchard breaks down to $814,000 per room. This is the second New York hotel that DLJ, which did not respond to a request for comment, sold off this year — in January, the private equity investment firm sold the Kimpton in Chelsea to Blackstone.

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