The Neighborhood Changer
Tom Acitelli Nov. 10, 2009, 1:03 p.m.
Sirio Maccioni, the legendary Le Cirque owner, needed a new location for his restaurant. He asked Henry Kissinger, a regular customer, for advice. The Bloomberg Tower, Dr. Kissinger answered. Le Cirque moved there in 2006.
Such is the deserved luck of the ballyhooed tower at 731 Lexington Avenue-half-luxury condo, as One Beacon Court (owners have included, among others, Johnny Damon of the world champion Yankees, and Beyoncé), and half-office building, as the Bloomberg Tower. The mayor’s media concern, Bloomberg LP, rents 885,000 feet on the bottom 31 floors of the 54-story tower. It is the sole office tenant; there’s not even any sublease space available in this, the worst office-leasing market since at least the early 1990s.
In 2004, the area surrounding the Bloomberg Tower, especially on the Third Avenue side, was not exactly an upmarket area, as it has increasingly become since the tower’s debut more than three years ago. Its developer, Steve Roth’s Vornado Realty Trust, filled the surrounding neighborhood with sleek new retail space that it purchased during the tower’s construction, and it now owns the block on the south side of 58th Street, and the retail on either side of Lexington-home to tenants such as Zales Diamonds and the salon Phyto. But the sine qua non of the building is definitely Bloomberg.
The mayor’s secretive company locks in the tower’s lucrative identity and provides the consumers for the surrounding retail-a sort of chicken-or-the-egg symbiosis. Those who have toured Bloomberg LP’s custom-built space, designed in an open layout by Studios Architecture, around a huge circular escalator, are in awe of it. New Yorker architecture critic Paul Goldberger described it as “a newsroom truly designed for the electronic age … a dazzling work environment tucked inside a refined but conventional skyscraper.”
The HBO documentary Le Cirque: A Table in Heaven follows Mr. Maccioni’s decision to move his definitively upscale French restaurant to the tower in order to give it a more contemporary feel and a more relevant address. The celebrated restaurant now looks out of 27-foot glass windows onto Beacon Court.
SEVEN-THIRTY-ONE LEXINGTON used to be the flagship site of Alexander’s department store, once a local Bloomingdale’s rival. The last Alexander’s to close, the store shut its doors in 1992. Alexander’s Inc., a REIT that now leases and develops the sites of the former stores, owns the building in a partnership with Vornado, which retains a 33 percent stake in the tower.
After the demolition of Alexander’s in 1999, The New York Times called the site “one of the world’s most valuable holes in the ground,” though the neglected building had been a blight on the neighborhood for years. Then, after more than two years of negotiations, Vornado struck a deal in 2000 to develop the site, with Bloomberg LP as the anchor tenant (Michael Bloomberg was still a private citizen then). Construction began in 2001, but was not finished until 2005, due to design difficulties.
The building, designed by Cesar Pelli of Pelli Clarke Pelli, has not changed hands since its construction. Of the 1,307,000 square feet of total space, 174,000 feet belong to premier retailers in the building’s ground and first-floor, glass-box units, such as H&M, Home Depot, and the Container Store. Atop the steel-framed business tower sit 105 luxury condos, all of which sold before the building opened.
Vornado erected another two-story, glass-box space at 968 Third Avenue, at 58th Street, to fill out the neighborhood, both in design and clientele; and it owns the brushed brass and limestone Architects & Designers building at 150 East 58th street. That 39-story mixed-use tower, a trophy for both its history and appearance, is the penultimate building in Vornado’s east midtown collection. The REIT owns other buildings linked to design, such as Chicago’s Merchandise Mart. But the Bloomberg Tower is the capstone.
And has this strategy paid off? Vornado would not comment for this story, but retail leasing in the region has perked up significantly since the Bloomberg Tower’s arrival, with other buildings in the area renovating and a new, livelier strip of retail sprouting on Third Avenue. (Office rents in the area, and not necessarily in the fully leased Bloomberg Tower, run generally into the $40s and $50s a square foot, according to Yale Robbins.)
A Times article from 2006 credits the tower with the increased activity. “Real estate owners and retailers in the neighborhood are also upgrading their properties. … Other retailers east of Third Avenue, an area that has traditionally had more service-oriented retailing … said they were feeling the pinch of the Bloomberg Tower, either in the form of rising retail rents or more competition for the potential customers.”