By Peter Grant and Konrad Putzier, Wall Street Journal
NEW YORK—The owner of a high-rise office building in Rockefeller Center is teaming up with home-rental giant Airbnb Inc. to convert 10 floors into the first modern-day lodging in the landmark 87-year-old complex.
RXR Realty and Airbnb said they hope to open the facility at 75 Rockefeller Plaza in about a year. The upscale rooms will be on the higher floors of the 32-story tower, allowing guests to gaze on St. Patrick’s Cathedral and offering a bird’s-eye view of Rockefeller Center’s annual Christmas tree lighting.
The Rockefeller Plaza deal, which is still subject to approval from lenders and other parties, is the first of what RXR and Airbnb hope will become a number of lodgings in the New York region. They also are discussing a facility with about 150 units at 47 Hall St. in Clinton Hill, Brooklyn, where RXR has been overhauling a century-old 10-building complex into modern office space.
The Rockefeller Plaza operation will offer about 200 units for overnight stays. It is being set up to avoid the friction that hampered Airbnb’s expansion efforts in other parts of the city. For example, it will be staffed by unionized labor and closely follow city rules, said Scott Rechler, RXR’s chief executive.
“This is a way that’s clearly going to comply” with all of New York City’s regulatory components, he said.
For Airbnb, the Rockefeller lodging would be the flagship of its new effort to expand in markets like New York City as it encounters resistance from local governments.
Under pressure from the city’s hotel industry, New York has imposed strict regulations on such short-term rentals and has hit owners who have failed to comply with heavy fines. In one action earlier this year, the city filed a lawsuit against a residential brokerage that it claimed was the hub of a wide-reaching hotel scheme.
Faced with such reactions in numerous cities, Airbnb has begun to shift its strategy, trying to become more involved in the design and operation of short-term rental apartments. A venture of Airbnb and real-estate developer Niido has opened an Airbnb-branded lodging in Kissimmee, Fla., and one in Nashville. Niido said it is planning many others.
These are part of the company’s broader effort to diversify its business as it prepares for an initial public offering of shares, expected next year.
Airbnb’s deal with RXR would be its first to create a stand-alone Airbnb lodging within an office building in New York. Talks between the two were earlier reported by Politico.
Since 75 Rockefeller Plaza and other RXR buildings are zoned for commercial use, transforming some floors into accommodations potentially faces fewer of the legal complications that have caused headaches for Airbnb hosts at New York City apartment and condo buildings.
“I think we will see how this model works, certainly take lessons from it and apply those lessons as we go forward,” said Chris Lehane, Airbnb’s senior vice president of global policy and communications.
RXR owns more than 6,000 apartments and about 25 million square feet of commercial property in the New York metro region.
In 2012, the firm leased 75 Rockefeller Plaza for 99 years and since then has overhauled the building and leased much of its space to traditional office tenants.
But RXR reserved upper floors for possible hotel use. The company increasingly has been mixing office, residential, hotel, entertainment and retail uses in its projects, believing that demand is growing for urban settings where people can work, live, stay and play.
Developed in the 1940s as the headquarters for Standard Oil Co., 75 Rockefeller Plaza is part of the storied Midtown Manhattan complex that is known for its outdoor ice skating rink, shops and restaurants. The original art deco complex was developed by John D. Rockefeller Jr. during the Great Depression.
Amenities at 75 Rockefeller Plaza already include a private club in the tower named Club 75 and a conference and co-working facility managed by Convene.
The lodging at 75 Rockefeller will be listed in the Airbnb system along with private homes, but won’t carry the Airbnb brand. Rather it and other RXR lodgings likely will have a name tied to the neighborhood or the building.
“Something like ‘The Rock,’” Mr. Rechler said.
The RXR platform manages 71 commercial real estate properties and investments with an aggregate gross asset value of approximately $20.5 billion, comprising approximately 31.4 million square feet of commercial properties, inclusive of approximately 6.0 million square feet of buildings securing debt and preferred equity investments, a multi-family residential portfolio of approximately 2,500 units under operation or development, and control of development rights for an additional approximately 3,700 multi-family and for sale units in the New York Metropolitan area as of June 30, 2019. Gross asset value compiled by RXR Realty in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.