Diamond From the Rough
Lysandra Ohrstrom Oct. 20, 2009, 3:11 p.m.
On Oct. 7, the City Council passed the first of two laws that would allow business improvement districts to take joint custody of properties that fall within the boundaries of more than one BID.
Together, the bills will end what has essentially been a three-year, amicable custody battle between the Times Square Alliance and the Bryant Park Management Corporation for management of the Durst Organization’s midtown gem, the Bank of America tower at One Bryant Park.
It took Durst more than 40 years to cobble together the 32 different parcels on 42nd Street between Avenue of the Americas and Seventh Avenue. When the lots were combined in 2004, the new site included ground located in both BIDs, though certain lots did not fall into either.
“We knew it would be split between two bids, but we didn’t know how that would work,” Douglas Durst, co-president of the Durst Organization, told The Commercial Observer. “It was a very torturous process to get it all worked out. It should have been simple.”
Durst agreed to pay half of its annual $300,000 assessment to Bryant Park and half to the Times Square Alliance. In 2007, One Bryant Park became the 25th property under the management of the Bryant Park BID, and generates $150,000 of the BID’s gross annual revenue. The City Council is currently reviewing the Times Square Alliance’s amended district plans and will vote on them in the next few weeks. Once the plans are approved, the BID will also earn an additional $150,000 annually.
“It’s unusual because most buildings are not split between two BIDs, but it was agreed that the building decided to support both the Bryant Park Management Corporation and Times Square Alliance,” Dan Biederman, the president of the Bryant Park Management Corp., said. “Bryant Park’s paperwork and approvals went through one and a half years ago, but Times Square’s is just going through now. So [Durst] has already been supporting Bryant Park for the last year or two, to the tune of about $150,000.”
The agreement is the best of both worlds for the landlord. “There are benefits to being in both BIDs,” said Durst spokesman Jordan Barowitz. “The Times Square Alliance has security patrollers within their BID and Bryant Park does not. So by being partially within Times Square, we get the benefit of their security.”
THE BATTLE OF THE BIDs could be the last chapter of the Dursts’ development within the Times Square area. The organization, then led by the late Seymour Durst and his brothers, first shifted its attention west in the 1960s after helping pioneer development along Third Avenue. “We felt that while the East Side remains prestigious, it will do no more than get older,” Seymour Durst told The New York Times in a 1969 profile. “There are only about 10 or a dozen office building sites left from the East River to Sixth Avenue. When those are filled, new building will be very spasmodic. So we’ve exchanged our sites, mostly on Third Avenue, for West Side sites. I used to say Fifth Avenue is too far west. Now I say Fifth Avenue is too far east.”
But the West Side area around Times Square, envisioned for a sort of “Rockefeller Center South,” was not the most desirable spot in Gotham. “The area was very rough then,” Douglas Durst, Seymour’s son, said. “It used to have all sorts of unsavory massage parlors with men handing out fliers, saying, ‘Check it out, check it out.'”
His father set out to build 10 office buildings on Sixth Avenue from 42nd to 47th streets on the Avenue of the Americas in the mid-1960s. Seymour Durst told The Times in 1969 that he had just finished the four-year job of assembling a 160,000-square-foot block-front on 42nd between Ninth and 10th avenues and was preparing to move the company’s headquarters from the Lorillard Building at 42nd and Third to the new 49-story tower under construction at 1133 Avenue of the Americas. Also in the late 1960s, Durst paid $10 million for a site on Broadway between 44th and 45th streets; earlier, it had bought the first two plots for the future One Bryant Park, White’s Seafood Restaurant and the Hotel Diplomat.
Though Seymour Durst told The Times he had no immediate plans to develop the companies’ West Side properties then-the 160,000-square-foot site would take between 15 and 20 years alone to develop, he estimated-the younger Durst said the firm had almost completed a deal on the site of what would become One Bryant Park when the economy crashed.
“We put most of it together by 1970 or 1971,” Mr. Durst said. “But then we had to give up a number of the properties in 1970s because of the recession. We finally put it together again in 2004.”
One Bryant Park was not the only one of Durst’s projects that was scuttled-all that remains of the vision for Rockefeller Center South is a copy of the plan at Durst’s office-but it was by far the most difficult to get back on track. Between 1973 and 2003, Durst slowly bought back some of the parcels the company lost in the early 1970s. Along the way, countless deals with holdouts have fallen through; the city flirted with the idea of condemning parts of 42nd Street; and prices skyrocketed.
“One of the pieces that we gave up in the 1970s we paid $650,000 for,” Mr. Durst recalled. “When we bought it again in the 1990s, it was $6 million.”
BY 1999, DURST HAD regained control of 85 percent of the block from 42nd Street between Sixth and Seventh avenues, according to The Times‘ Charles Bagli, who exhaustively chronicled the negotiations surrounding One Bryant Park. In 2003, Durst and Bank of America finally wrested control of the last two parcels of property from Rafi Albert Nasser, Rafi Morris Nasser and Joseph Bernstein, a former ally who had been fighting the company ever since a deal for another parcel of land fell through in 1986, according to The Times. In the end, Durst paid $46 million, or about $384 a square foot, for the two properties, more than twice the price of the most expensive deal on record at the time.
Construction of the 52-story, $1.1 billion building, designed by Cook and Fox Architects, started in 2004. Bank of America occupies about half of the tower. At his wife’s suggestion, Mr. Durst opted for the address One Bryant Park over 1111 Sixth Avenue.
The building has had a few hitches-most notably debris falling from the construction site-but they pale beside the process of assembling the site.
“We were very fortunate in getting an incredible market that lasted about a year,” Mr. Durst explained of how the recession has impacted leasing at the tower. “When we were building, I said our rents would start with a ‘1′ in front of them, and everyone thought that was not possible. We had that when we started leasing. We even had some leases in the $200 range at the end,” he said. “That lasted about three weeks, though. Then, as you know, the market disappeared.”
Nonetheless, One Bryant Park is 98 percent occupied, Mr. Durst said, and rents are still in the $100s a square foot-“the low $100s,” he added. Some of One Bryant Park’s tenants have subleased space in the past year, and Durst is building out the 40,000 square feet of vacant space.
Otherwise, the recession has taken little serious toll on the gem. Last May, Durst was even able to refinance the $650 million construction loan it took out in 2004, for $1.27 billion. So far, the deal has been one of the biggest the credit markets have seen since mid-2007, though like everything else at the building, it was the result of a long, drawn-out negotiation, this one involving Durst’s five different lenders.
It will likely be one of Douglas Durst’s last as co-president of the company his grandfather Joseph started in 1927. After spending more than three decades carefully cobbling his father’s vision of Times Square back together, Mr. Durst said he plans to step down when construction of One Bryant Park is finished.