Planned Tower Would Cap Off Revitalization of Times Square
Charles V. Bagli
The New York Times
Where workers no longer fear to tread: the site of a planned 40-story office tower at the southeast corner of 42nd Street and Eighth Avenue.
#FXFOWLE #SJP PROPERTIES #TIMES SQUARE
If in the past many people feared strolling down 42nd Street, now the block between Seventh and Eighth Avenues, and Times Square itself, are safe for investment bankers, accountants, MTV fans and tourists alike. The theaters, skyscrapers, theme restaurants and nightclubs that have opened in recent years under pulsating neon signs and giant electronic billboards are often packed.
But the decision by the developer, SJP Properties, to build a 40-story tower at the southeast corner of Eighth Avenue and 42nd Street is remarkable on several fronts. Not only would it complete a major public revitalization project, but urban planners and real estate executives say another first-class tower would also establish Eighth Avenue as a legitimate boulevard for corporate offices.
“This is the last piece of the puzzle,” said Charles A. Gargano, the chairman of the 42nd Street Development Project and the state’s top economic development official.
SJP’s 1 million-square-foot building would join two other major office towers on Eighth Avenue: the Worldwide Plaza tower at 49th Street and The New York Times headquarters under construction at 41st Street. Until now, few companies have been willing to locate west of Seventh Avenue or Broadway.
If the project goes forward as planned, the SJP tower will also be the first major speculative office building — one built without an anchor tenant — in a decade and another sign of a resurgent commercial market in Midtown. Builders have erected apartment houses by the dozens over the past five years, but office developers have bemoaned that rents did not justify the cost of building a new tower.
But commercial rents are now going up quickly, with some tenants paying as much as $150 a square foot per year in prime Midtown buildings, and large blocks of available space are hard to find.
“This is the first time in 25 years that we’ve seen the Midtown market this strong for Class A office space,” said Steven J. Pozycki, SJP’s chairman. “We’re excited about both the opportunity and the timing.”
SJP Properties has been largely known as a developer of suburban office parks in New Jersey and Pennsylvania. But the company has been eager to get into the Manhattan market. It has begun excavation for a 42-story apartment building at 46th Street and Eighth Avenue and plans to build a condominium tower on Park Avenue.
Mr. Pozycki bought the 42nd Street property last month for $305 million from Howard and Edward Milstein. The Milstein family had acquired the property early in the redevelopment project, in 1983, for $5 million. The Milsteins announced in 2002 that they planned to build a 35-story tower there, but never got beyond erecting a blue construction fence.
Where workers no longer fear to tread: the site of a planned 40-story office tower at the southeast corner of 42nd Street and Eighth Avenue.
Credit...Hiroko Masuike for The New York Times
The 42nd Street Development Project gave tentative approval yesterday to SJP’s plan for a 40-story tower and a deal to buy additional development rights for $23.2 million. Mr. Pozycki, whose firm hired FX Fowle Architects to design the building, said the office tower would sit above two floors of stores at what would be known as 11 Times Square. Construction should begin in about 10 months, he said. Final approval is expected later this year.
“It’s ironic that this site, which we thought might be the first one to be developed, ends up being the last one to complete the Times Square project,” said Carl Weisbrod, who worked on the redevelopment plan as both a state and city official from 1980 to 1995. “It’s turned out to be a highly successful venture, but I don’t think any of us thought it would take 26 years.”
Despite a string of news conferences and much fanfare during the 1980’s, the redevelopment of 42nd Street and Times Square was hobbled by 47 lawsuits, opposition from civic groups and a deep recession in the early 1990’s. A merchandise mart was originally planned for the two blocks between 40th and 42nd Street, where the Times building is now under construction and SJP’s property sits. In 1980, the city had actually passed on an opportunity to buy the SJP property for a couple of million dollars.
Mr. Gargano said there were two crucial breakthroughs, the first in late 1993, when the Walt Disney Company signed a tentative agreement to renovate the landmark New Amsterdam Theater on 42nd Street. Then in 1996, he said, the developer Douglas Durst began building a skyscraper at 4 Times Square, the first of what would eventually be four office towers in the middle of Times Square. As SJP is doing, the Durst family took the relatively rare step of starting construction without an anchor tenant.
Ten years later, Mr. Pozycki says the time is right to build another speculative office tower, this time on Eighth Avenue. Oddly enough, his partner is Prudential, the giant insurer that was selected by the state in the 1980’s to buy 13 acres between Seventh and Eighth Avenues and develop four office towers in Times Square. But Prudential sold the land for the towers during the 1990’s recession.
The market is hot now, Mr. Pozycki said. The average asking rent in Midtown has climbed to $58.26 a square foot, while the vacancy rate dropped to 8.7 percent last month from 13.1 percent in late 2003, according to Newmark Knight Frank, a real estate broker.
And there is little new office space available. Mr. Durst, who is building the Bank of America Tower at 42nd Street and Avenue of the Americas, has signed leases for virtually the entire 2.1 million-square-foot building, including one for $100 a square foot.
At The New York Times Building, across Eighth Avenue from the Port Authority Bus Terminal, the newspaper company plans to occupy half the tower next year, and its partner, Forest City Ratner, has leased much of the rest of the building to three law firms and a financial services company.
Recently, Vornado Realty opened talks with the Port Authority about reviving plans to build an office tower over the bus terminal, across Eighth Avenue from the SJP project.
Mr. Pozycki said his broker, Stephen B. Siegel of CB Richard Ellis, took him to Howard Milstein earlier this year to talk about a deal. He said Mr. Milstein responded, “This is my price, take it or leave it.” Despite the relatively high cost of the land, Mr. Pozycki said it should not be too risky to build without a tenant.
“The market and confirmation of the Eighth Avenue neighborhood itself takes a lot of the ‘spec’ out of speculative,” Mr. Siegel said. “What’s going on in Midtown is fueled by real job growth and a lack of supply.”content // Go Back ☜
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