Mann Report Residential
Mann Report Residential
Seeing Opportunities on the horizon and making highs out of market lows
Brad Korman “We have opportunities that did not exist several years ago and our program fits these market conditions beautifully.” AKA Korman Communities.
When New York City condominium developers find their for-sale projects languishing, they turn to Brad Korman.
As co-president of AKA, a fast growing and innovative extended-stay hotel brand, Korman wants to convert the right condo buildings into fully-furnished, all suite AKA properties. He and his brother, Larry Korman, have already done this successfully in New York (at AKA Central Park, AKA Times Square, AKA United Nations and AKA Sutton Place), Philadelphia and Washington, DC. Brad is currently looking to pick up troubled condo developments from cash-strapped developers in New York City, Los Angeles, London and other major world markets.
While some condominium developers and lending institutions may think an exit strategy for a troubled project is to turn it into a straight rental building, Korman maintains this won’t work in this market. “You can’t get standard rents of one year or more on unfurnished apartments high enough to cover today’s costs,” said Korman. AKA, because it commands higher rents for well-appointed, fully furnished residences with hotel-like services for guests who typically stay 30 days or more, can make the numbers work.
The Right Time in the Right Market
Currently, the lodging industry’s hottest segment, the $5.7 billion extended-stay market, is growing three times as fast as traditional hotels. The market share for upscale extended-stay brands has more than doubled in the past decade, from 14 million room nights in 1998 up to 29.3 million in 2007.
AKA was created by the Korman family of Philadelphia-based Korman Communities to serve the high-end long-stay market in major urban areas. Korman Communities, a fully integrated real estate company with development, management, and financial capabilities operating through out the United States, discovered this unmet need within the market and eagerly launched the new brand. As a fourth-generation family company, CEO Steve Korman leads Korman Communities and the co-presidency of AKA is headed up by Larry, who handles the general operations of the properties, and Brad, who handles portfolio acquisitions.
Setting the Brand Apart
Brad and Larry have worked hard to distinguish AKA and infuse the brand with innovations that resonate with consumers. At AKA, the tagline reads, “Don’t just visit, live it!” This bold statement led to the creation of a lifestyle program that offers life-enriching opportunities to guests who are away from home for extended periods of time. This includes classes with wine sommeliers, French cooking lessons, learning how to be a DJ, learning how to play the guitar and more.
A favorite among the entertainment industry for its inherent anonymity and spacious suites as opposed to cramped hotel rooms, AKA is very protective of the A-list movie stars, entertainers, and television crews that make AKA properties their home away from home while on location.
Surviving and Thriving in Today’s Market
Korman says that today’s credit crunch also works in AKA’s favor because there are fewer buyers. “We have opportunities that did not exist several years ago,” he says. “And out program fits these market conditions beautifully.”
The AKA portfolio currently consists of eight properties throughout metro New York (5), metro Philadelphia (1), and metro Washington, D.C. (2). With plans to expand, the Korman brothers’ goal is to have 20 AKA properties worldwide by 2010. While securing locations in Manhattan, Los Angeles, and London, Korman says he will be happy if the next ten deals are New York. As the market continues to embrace the AKA brand, that aspiration may soon be realized.
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