Times Square Marches On
Billy Gray Oct. 29, 2013, 9 a.m.
Lisa Steinberg was just a few months out of college when she was bound, gagged and stabbed to death in the office of a Gap store on West 57th Street near Broadway. It was January of 1992, halfway through David Dinkin’s only term as mayor of an increasingly anarchic and crime-plagued New York.
The murder rate had peaked at 2,245 in 1990. But the number of homicides climbed in the Midtown South precinct—which includes Times Square—reaching 11 in 1993. East New York’s 75th precinct broke the record that year for the most murders in a single precinct: 126.
That was also the year Colin Ferguson killed six people and injured 19 others during a shooting rampage on the Long Island Railroad. An Indian prince and his wife were found dead in their Park Avenue apartment, victims of either a double homicide or murder-suicide. And thousands of taxi drivers formed a caravan that crippled Manhattan traffic as they protested the 35th murder of a cabdriver that year and the NYC Taxi & Limousine Commission’s inability to enhance protection.
Twenty years later, West Midtown between 57th and 42nd Streets is a radically transformed neighborhood whose peep shows, pickpockets and hookers have given way to Disney musicals, double-decker tourist buses and Elmo impersonators. Marquee office and retail tenants have flooded into skyscrapers erected following a mid-’80s upzoning and public-private reinvestment in 42nd Street and neighboring corridors.
Yet the current mayor’s race has taken a turn toward bitter nostalgia, with the underdog Republican candidate, Joe Lhota, loudly suggesting that the progressive favorite Bill de Blasio will go lax on crime, restoring lawlessness and disorder to the five boroughs. On Oct. 16, the Lhota campaign released a 30-second video ad rife with stock footage of police tape, graffiti-caked subways, muggers and police in riot gear. “Bill de Blasio’s recklessly dangerous agenda on crime will take us back to this,” the ad warns before the torrent of despair.
While injecting the subject of commercial real estate into a discussion of murder, rape and robbery might seem callous, the industry is paying attention to Mr. Lhota’s alarms, even if some players are skeptical of resurgent grit undoing two decades of major gains.
“Times Square is here to stay,” said Faith Hope Consolo, of the retail group at Douglas Elliman. The famously outspoken Ms. Consolo featured prominently in Dinkens-era media reports of a nascent Times Square renaissance. But the woman who worked on high-profile Times Square comeback leases such as the Toys “R” Us deal on Broadway recalled some crafty maneuvering to convince retail tenants of the still-seedy area’s long-term viability.
“Someone on my team was showing space on 42nd Street,” she said. “We were telling everybody: ‘This is coming; that is coming.’ But retailers don’t buy futures. There were a lot of vagrants. And forget about the hookers. So I gave one broker a roll of $100 in singles. He’d ask [the vagrants] to move, and, if they did, he’d give them a buck for coffee. By the fourth week of doing this, we’d moved people four blocks away from the site.”
As the less savory elements of the Times Square population moved away from the Bowtie—even if only to Eighth Avenue—increasingly impressive corporate and retail tenants moved in. In part, that was due to a massive spike in total available space. Richard Persichetti, the vice president of research, marketing and consulting at Cassidy Turley, said that at the end of 1993, there was 10 million square feet of real estate in Times Square compared to 18 million square feet today. The average asking rent across all building classes in 1993 was $18 per square foot. Today, that number stands at $78.25.
James Delmonte, the director of research at Cushman & Wakefield, supplied numbers stretching back to 1995, when the Times Square South submarket had a vacancy rate of 16.8 percent. There was 1,136,862 square feet of leasing activity in 1996. That number nearly tripled, to 3,095,004 square feet, the following year. In the third quarter of this year, the Times Square South vacancy rate stood at 9.2 percent.
Real estate brokers who were instrumental in the Times Square renaissance singled out a handful of developments and leases chiefly responsible for the turnaround. One was Disney’s lease in 1993 of the faded New Amsterdam Theatre on 42nd Street. That victory for the city and state’s ambitious 42nd Street Development Project—a plan to reinvigorate 13 acres of the then-infamous boulevard with four giant office towers and refurbished entertainment venues—brought an almost comically dissonant “fixer” to porn row.
“That was a stamp of approval,” Ms. Consolo said. “Then we had the new developments,” including [the Durst Organization’s] 4 Times Square, which opened in 1999 as the home of Condé Nast. “Durst was the bell cow with 4 Times Square,” said Robert Futterman, the chairman and chief executive of the retail brokerage RKF. “That was the biggest game-changer.” He cited 1585 Broadway, the Thompson Reuters Building and 2 Times Square as other paradigm shifters.
“That’s when the retail changed,” Mr. Futterman said. “Before the office tenants moved in, it was always souvenir and T-shirt shops, camera stores and fast food. It was all tourist-driven. There was no office population to cater to. As the neighborhood started to gel, you had not just tourists but an office and burgeoning residential landscape.”
Perhaps Mr. Futterman’s signature retail transaction in the new Times Square was bringing the Virgin Megastore—a CD and DVD powerhouse in the quaint predigital age—to 1540 Broadway. “That was a big leap of faith,” he said. “And then what followed is that you started to see fashion come in. You never would have seen that in Times Square before. There was the Gap on 42nd Street, which anchored Times Square with fashion retail.” Quicksilver and American Eagle followed suit. A 42,500=square-foot H&M is currently under construction at 4 Times Square.
Major retail tenants were drawn to the Crossroads of the World not just for its foot traffic but also the fact that Times Square stores were advertisements in themselves. “It’s not just an opportunity to do great sales-volume,” Mr. Futterman said. “It also acts as a showcase, a billboard.” Speaking of showcases, Ms. Consolo said that strengthening Broadway box office—thanks in part to child-friendly Mouse House musicals—also helped redeem the neighborhood. “But the fact that it became safer,” she said, ”was the icing on the cake.”
As for crime and quality of life, does the industry share Mr. Lhota’s stated fears about their erosion? Real estates owners and brokers very often demur when asked which candidate they’re supporting. And several publications including The Commercial Observer have written about the surprising degree to which Mr. Lhota and Mr. de Blasio agree on issues like rezoning. That could help explain why some real estate professionals are more outspoken on and concerned with who will be the next police commissioner than who’ll be running City Hall.
“I think Ray Kelly’s doing an incredible job,” Mr. Futterman said of the New York Police Department veteran whose defense of the stop-and-frisk program has sparked controversy. “If the next mayor keeps Kelly, we’ll be great,” Ms. Consolo said, adding that “everyone’s concerned about crime. They’re more concerned about crime than who’ll be mayor! All I want to know is who the next police commissioner will be.”
Despite the big question of NYPD hierarchy, those who witnessed Times Square’s transformation have trouble seeing it return to the bad old days. “It was a pretty tough area back then,” Mr. Futterman said. “That would be a real shame. I can’t imagine that with all the controls put in by Bloomberg that it would disintegrate.”
He mentioned current projects including the Witkoff Group’s hotel-retail project at 701 Seventh Avenue and the $140 million renovation of the Milford Plaza on Eighth Avenue as signs that money continues to flow in and that new frontiers in neighborhood rehabilitation were moving north and west. Microsoft’s lease in January of 230,000 square feet at 11 Times Square also augured well for the future of the area.
“People thought that building was going out on a limb, and it turned out to be the epicenter of what’s happening,” he said.
So far, what’s not happening in Times Square—or citywide—is a return to the days of New York as the murder capital. There’s been one murder this year in the Midtown South precinct, an 89 percent plunge from 1993. Rapes are down 71 percent, robberies down 93 percent. Crime overall has fallen 83 percent in the past 20 years.
Statistics like these make many question the legitimacy of Mr. Lhota’s prophesizing campaign ads. And Times Square’s reputation as a family-friendly tourist magnet and entertainment district seems particularly immune to any backsliding that may occur under a new administration and reorganized NYPD.
“There’s not going to be a dip,” Ms. Consolo said. “People still go out to eat, drink and see concerts even during the bad times. It takes them away from their problems. And even if we’re all blindsided by the mayor’s race—and I think we already are—I don’t think that’s going to change.”