The Real Deal New York

Times Square Tower fills up

October 15, 2007
By Stuart W. Elliott

Times Square, once synonymous with seedy urban vice, is now home to the most concentrated stock of new office buildings in the city. While brokers acknowledge there are more desirable areas to set up corporate offices in Manhattan, the district has done well, particularly at Times Square Tower, at 7 Times Square, which faced significant obstacles in its path to occupancy.

The building was to be the home of Arthur Andersen before the company collapsed in the wake of the Enron scandal. After the accounting firm backed out of taking 400,000 square feet in the 47-story, 1.2-million-square-foot building in 2002, the search to fill the gaping hole began.

After a scramble, owner Boston Properties has signed six major tenants, including four law firms, totaling nearly 800,000 square feet.

“Times Square Tower is a pretty remarkable story,” said Howard Nottingham, executive managing director at Studley. “They have fared very well, and I think they’ll be 90 percent filled up at year’s end.”

The most recent deal, announced last month, was for 138,000 square feet for law firm Heller Ehrman White & McAuliffe. Ann Taylor announced a deal for corporate offices totaling 300,000 square feet the month before.

Times Square Tower is the latest in a series of new office projects for the area, beginning in 1996 with Douglas Durst’s 4 Times Square. The others include the Reuters Building (3 Times Square) and Ernst & Young’s national headquarters building (5 Times Square).

“There haven’t been many commercial buildings built in the last 12 years in New York,” said Mark Edelstein, a partner who practices real estate law with Morrison & Foerster LLP in New York. The number of new office projects can be counted on two hands. Going forward, Durst’s One Bryant Park, a 2.1-million-square-foot office building, is scheduled for completion in 2007, in addition to the New York Times headquarters building (see related story in this issue).

“It’s the best stock of new buildings in the city in one area,” said Nottingham. “At least the near future growth for Midtown will be focused there.”

Nottingham acknowledged however that “the foot traffic and touristy nature of the area” can be negatives. John Maher, senior vice president and partner at CB Richard Ellis, said most tenants “would still prefer to be on Park Avenue and 50th Street” than in Times Square, though he praised the success of the Times Square Tower project.

Maher also said it would have made sense 10 years ago if there had been more development to the south – between Grand Central, the Port Authority and Penn Station, because of transportation – rather than in Times Square. But he said if the new construction in Times Square, including the Times’ project south of 42nd Street, fuels development heading south, “that’s good.”

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