Times Square, the “Crossroads of the World,” is at a crossroads — its thriving office market buoyed by a surprising influx of tech companies even as the streetscape grows ever more chaotic.
The Times Square/West Side submarket’s nearly 34 million square feet boasted a healthy, low 9.2 percent availability in the third quarter, according to CBRE, compared with overall Midtown availability of 12.3 percent. Asking rents were up to around $67 per square foot from about $61 last year.
Yet a Martian landing in the midst of the “Bowtie” might not believe the area’s an office mecca at all, much less one of the world’s most successful.
Times Square, comprising Broadway and Seventh Avenue between 42nd and 47th streets, and many adjoining blocks to the east and west, has anything but a corporate look, lit by a blizzard of flashing LED signs that turn night to day.
It’s denser than ever with tourist hordes, corner-clogging buses and insult-shouting Elmos. The southern-most two of the Bowtie’s five pedestrian plazas are closed for infrastructure work to prepare them for sleek, light-reflective resurfacing, a job that may last until 2016; for now, it’s shunted even more grazers to the three northern ones.
And visual disarray is about to get worse before it gets better. Demolition is beginning for 701 Seventh Ave., the big mixed-use project at West 47th Street headed by Steven Witkoff and to be anchored by a Marriott Edition hotel.
The Broadway-side retail frontage of the Marriott Marquis Hotel between 44th and 45th streets will go dark as Vornado spends $140 million to redesign it with storefronts facing the sidewalk and a new signage base.
Vornado is leasing the frontage from the building’s owner, Host Hotels & Resorts. When the Marriott opened in the 1980s, Times Square Alliance President Tim Tompkins notes, the Bowtie was full of muggers, pimps and three-card monte dealers, so the hotel was built “like a fortress facing in.” The redesign will give it the public face it deserves on Broadway — but not for another year.
Despite today’s tourist stampede, many large companies call the Times Square/West Side’s 47 office buildings home including Viacom, Morgan Stanley, Thomson Reuters and Proskauer.
The appeal includes buildings with ultra-modern electronic and environmental features, relatively competitive rents and unparalleled subway connections. Those make the area irresistible to companies if not necessarily to employees — our Condé Nast friends say they “can’t wait” to move to the World Trade Center by 2015 to escape the tourists.
And now, CBRE vice-chairman Paul Amrich, who represents 1500 Broadway between 43rd and 44th streets, notes that the area has become an unheralded magnet to tech and new media firms.
Recent big deals include Microsoft and eMarketer at SJP Properties’ 11 Times Square on Eighth Avenue and Yahoo! at Africa-Israel’s 229 W. 43rd St., the former New York Times building.
There have been many others, including About.com and Videology at 1500 Broadway, where each took over 20,000 square feet. Asking rents are in the $52 to $70 range, and “our taking deals range from $47 to $63,” Amrich said.
Times Square was never much of an office district at all until late-1980s and early-’90s development led to such projects as 1585 Broadway and 1540 Broadway.
Then came the quartet of new towers at 42nd Street, nudged along by state and city subsidies in the late ’90s and early ’00s. They drew Condé, Ernst & Young and other firms that previously might have run from an entertainment zone still recovering from its dark age.
Tompkins says that while area leasing prior to December 2011 continued to be driven by law firms, traditional media and banks, nearly all major leases completed since then have been in the tech sector.
In fact, from December 2011 to May 2013, 33 percent of all leased square footage was for tech and related uses — a total of 633,000 square feet in 2012-13.
Some of us find Times Square to be more congested and less hospitable to high-end office use than ever — not due to crime, which was tamed years ago, but for its carnival-atmosphere attractions like the Toys R Us Ferris wheel, Ripley’s Odditorium and the discount TKTS booth.
Yet, Amrich sees it differently. He credits Times Square’s office-tenant appeal to the Department of Transportation’s pedestrian walkways and “the rejiggering of traffic” which resulted from closing Broadway to vehicles: “More tenants are amenable to going there, because it doesn’t feel as crazy as it used to be.”
The retail frenzy is unabating as well — not only along Broadway and Seventh Avenue, where ground-floor rents have topped $2,000 a square foot, but also on the side streets.