Get With the Times: The Ever Changing Face of Times Square

“This is the Great White Way, theatrical center of America and wonder of the out-of-towner. Here midnight streets are more brilliant than noon, their crowds on ordinary evenings exceeding those of large town carnivals,” reads The WPA Guide to New York City, in 1939.

Last month the city announced a record 56.4 million visitors in 2014. Accordingly, the number of hotel rooms citywide is expected to exceed 115,000 by 2017—and 19,145 of those rooms will be in Times Square, according to the Times Square Alliance, which represents West 40th to West 53rd Streets between Avenue of the Americas and Eighth Avenue, and Restaurant Row (West 46th Street between Eighth and Ninth Avenues). Currently 17,463 of the city’s 102,000 hotel rooms are in Times Square.

“Leisure travel in Times Square is very strong,” said Stephen Schafer of Felcor, the majority owner of the Knickerbocker Hotel (6 Times Square), which opened last month. “You can see how much it has evolved over the past 25 years and it only continues to get better.”

Justine Rivera, the general manager of the Hilton Garden Inn Times Square at 790 Eighth Avenue, has seen the rise in demand firsthand. She was hired shortly after the hotel opened in 2005 and helped open the Hilton Garden Inn Times Square Central at 136 West 42nd Street in November. Room rates start at $199 per night. Rooms at the adjacent Knickerbocker start at $695 a night. (Back when it opened, rates at the Knickerbocker averaged $3.25 per night, just to give you a sense of how far things have come.) There’s something for everyone here.

“We’ve booked a holiday in the very centre of the busiest city in the world so we can experience noise, neon, crowds—all the things you don’t get at home,” said a TripAdvisor user from Ireland, responding to locals attempting to thwart plans to stay in Times Square.

“New hotels and tenants in Times Square reflect the ever-evolving nature and vibrancy of the city itself,” said Chris Heywood senior vice president of Global Communications at NYC & Co., the city’s official marketing arm. According to its stats, the area—West 42nd to West 47th Streets, from Broadway to Seventh Avenue, along with spillover—hosts more than 39 million visitors annually.

Landlords and business owners have long appreciated the high volume. A note to those who have not: Last year the tourism industry generated $3.7 billion in local tax revenues. In 2013 it was $3.5 billion, an amount that trickled down to every New York City household by an average of $1,640 in tax savings, according to NYC & Co.

Street business is up too, in part because there’s more public space. And there’s competition. Last year some of the more aggressively costumed characters inspired proposed legislation requiring a $170 two-year license and the wearing of a badge. City Councilman Andy King, who introduced the bill, said it’s still being tweaked.

“I’m used to Mickey Mouse being a friend of mine,” Mr. King said. “We want people to come out and enjoy Times Square as a fun experience, not a frightening one.”

Public spaces have brought up other concerns as well.

“The dislocation caused by the construction of the plazas has caused some bottlenecks and tight squeezes in and around the bowtie,” said Jordan Barowitz, a spokesman for the Durst Organization, which owns 4 Times Square, referring to the place where Seventh Avenue and Broadway cross. “However the plazas themselves have improved Times Square and the fundamentals of the submarket. Proximity to outstanding transportation, retail, theaters, hotels and restaurants make Times Square a very attractive office address.”

Many share his sentiment.

“The great things about Times Square outweigh the not-so-great parts of it,” said Charlotte St. Martin, the executive director of The Broadway League, a theatrical trade organization.

Commercial vacancy was 25.4 percent in 1994 and is now 6.7 percent, according to the Times Square Alliance, referencing a Times Square BID annual report.

Note: Many say the Great White Way moniker was first a reference to a 1901 book about the Antarctic following a Broadway-blanketing snowstorm in 1902; lights second. Either way, the lights in Times Square are brighter than ever. In November, Vornado Realty Trust activated the area’s biggest signage: a 26,300-square-foot digital billboard that wraps around the front of the Marriott Marquis Hotel at 1535 Broadway. It was widely reported that initial asking monthly rent exceeded $2.5 million. A spokeswoman declined to comment on the company’s relationship with the neighborhood.

Last month, though, Vornado announced it was increasing its ownership interest in the Crowne Plaza Times Square Hotel at 1605 Broadway at West 48th Street to 33 percent from 11 percent, a transaction that valued the multi-use property at about $480 million. The company’s website sells the area as “one of the most highly recognized retail corridors in the world.”

That resonates with the likes of Skagen, which opened a 1,500-square-foot store at 1585 Broadway off of West 48th Street in September. “Being situated in the heart of New York, Times Square is a bustling epicenter and cultural crossroads that allows us to connect with the global customer,” said Jennifer Pritchard, the president of Skagen. Skagen’s store, which sells watches, accessories and home goods, is adjacent to the 3,200-square-foot Fossil store. Fossil Group owns both.

Brazilian flip-flop company Havaianas opened a 350-square-foot store at 1588 Broadway between West 47th and West 48th Streets the same month. And Japan’s Citizen Watch opened a 1,300-square-foot store at 1500 Broadway, between West 43rd and West 44th Streets in November. Neither responded to requests for comment.

C. Bradley Mendelson, the vice chairman of retail services at Cushman & Wakefield, who has been working with Times Square properties since 1980, says these days the area really does sell itself. “Any large user, the ones who have a presence on 34th Street and on Broadway in Soho, needs a Times Square presence as well.”

That wasn’t always the case of course. “The heartland of undesirable New York is the block of 42nd Street between Seventh and Eighth Avenues,” reads the 1982 introduction to a reprint of the WPA guide. “Here is the national cesspool.”

Mr. Mendelson said as recently as 16 or 17 years ago it was impossible to get real retailers to the middle of Times Square. There were just camera stores and junk shops, recalls the man who sold Howard Johnson’s on behalf of the Rubinstein family to Jeff Sutton of Wharton Acquisitions for a reported $100 million in 2005. Built in the late 1950s it was the oldest, continually operated business directly facing Times Square.

Now 1551 Broadway between West 46th and West 47 Streets is home to American Eagle and a 15,000-square-foot digital display. ABC National Television Sales, which represents American Eagle, said it was prohibited from commenting, but the website for ABC National Television Sales says West 46th Street and Broadway hosts 100,000 visitors daily.

Today, Mr. Mendelson said, the area’s deficit is restaurants. “There’s just not enough food. Times Square rents are too high,” he said. It takes ownership like Landry’s, which operates some 40 brands in more than 450 locations, to survive the cost. Asking rents at the 16,000-square-foot Bubba Gump Shrimp Co. at 1501 Broadway between West 43rd and West 44th Street run in the $60s per square foot.

“A triple-A national company like Disney or M&M’s can put part of their advertising and marketing budget towards rent,” said retail broker James Famularo of Eastern Consolidated. “Independent restaurants can’t do that.” He steers clients to more affordable side streets. Last summer, by taking over one existing lease and working in a second after a two-year search, Mr. Famularo secured 10,000 square feet for 10 years at 125 West 44th Street between Seventh Avenue and Avenue of the Americas for Hunt & Fish Club. The asking rent was $250 per square foot. Opened in December, the steakhouse is so busy (Derek Jeter-type busy), Mr. Famularo joked he can’t get a table there. “I tell all my clients if you want to be cool, go Downtown,” the broker said. “If you want to make money, go to Midtown. There’s 10 times the population.” He’s shopping the area now with other restaurateurs that he cannot disclose.

Even established mini-chains have to open off center. Melt Shop (875 Eighth Avenue) and Va Presto by Scotto (750 Eighth Avenue) opened in December along the perimeter, joined earlier this month by 4,000-square-foot upscale food court City Kitchen at hotel Row NYC (700 Eighth Avenue). Outposts of nine popular brands, like Dough Doughnuts, are there. The hotel did not respond to requests for comment.

Back in the heart of things, the big news of this month—first reported by Commercial Observer and picked up globally—was the departure of Toys “R” Us from its 110,000-square-foot location at 1514 Broadway, also known as the Bowtie Building. Demand for space on one of the area’s busiest blocks is high, said Mr. Mendelson, a leasing agent since the mid-1990s.

Landlord Charlie Moss operated a theater within the building until Regal and AMC opened a combined 40 screens in separate theaters on West 42nd Street. That was 2000. “We realized the only way to market that space was to break it into smaller parts,” said Mr. Mendelson. All current tenants—Bond 45, Foot Locker, Swatch, Starbucks—will vacate by February 2016. There are already deals pending for about half the space, said Mr. Mendelson, who received a request to purchase the famous indoor Ferris wheel a day after the news broke.

“It’s not often you get the best location with that amount of space.”

Asking rent in the 150,000-square-foot building is $150 per square foot on the lower level and third floor, $350 per square foot on the second floor and $2,500 per square foot on the ground floor.

“Like any great play, Times Square has had its twists and turns, but it has retained its razzle-dazzle,” said Ms. St. Martin.