[NYguy]

http://www.nytimes.com/2015/01/27/ny...=nyregion&_r=1

Times Square’s Crushing Success Raises Questions About Its Future





By CHARLES V BAGLI
JAN. 26, 2015

The Crossroads of the World has never been more popular. And that is becoming a problem.

More people than ever are packing into Times Square — from across the world, the country and the rest of New York City.

Eager to dip into such a bounty of wallets, international retailers are jostling for space, paying rents that are second only to Fifth Avenue. Pulsing, color-splashed digital billboards have grown from the size of basketball courts to football-field proportions. Attendance at Broadway shows topped 13 million last year for the first time.

With all this going for it, why are so many landlords, office tenants and theater owners worried about the future of Times Square?

The same reason that retailers and advertisers lust after a Times Square location is the same reason that others now find it unbearable: the crowds.

Some office workers and corporate clients complain bitterly of having to navigate thick and sometimes unyielding knots of tourists in various hot spots — including a giant video billboard outside the “Good Morning America” studios and a digital wraparound sign at the Marriott Marquis Hotel — just to get in and out of office buildings. A 30-minute lunch is nearly impossible because restaurants are jammed with visitors.

Howard S. Fiddle, vice chairman at the real estate services company CBRE, said, “It’s so successful as a tourist destination that people say it’s too congested for New Yorkers to conduct business.”

Few landlords are willing to talk about the issue publicly for fear of turning their concerns into reality. But companies are dealing with the problem in small and large ways.

A skyscraper at 1540 Broadway, for instance, offers an eighth-floor cafeteria and a gym so employees of several companies, such as Viacom and Pillsbury, do not have to step outside.

The pitch from real estate brokers for renovated office space in the former headquarters of The New York Times Company, on 43rd Street, just outside the most congested parts of the neighborhood, is simple: You get all of the benefits of the transportation network without the negative of the crowds.

Some executives insist on walking away from Times Square for meetings, lunch or a drink. “I generally lived my life east of the building,” said Graydon Carter, the editor of Vanity Fair, who until recently worked at 42nd Street and Broadway.

Indeed, a test of the area’s desirability as an office district is underway at 4 Times Square, the 48-story tower erected in 1999, just as the area was shedding its dowdy, crime-ridden reputation.

Condé Nast, the publisher of Vanity Fair, The New Yorker, GQ and others, had occupied half the building since it opened. The company moved downtown in November, and the other tenant, the law firm Skadden, Arps, Slate, Meagher & Flom, has signed a tentative agreement to move to a new office tower near Penn Station.

There were a number of overarching reasons, such as economics, for the departure of Skadden Arps and Condé Nast. But conditions in Times Square lurked in the background.

“There was some desire to get out of Times Square,” said one lawyer at Skadden Arps, who requested anonymity because he was not authorized to speak for the firm. “Everyone agreed, it’s awful there. People would go well out of their way to avoid Times Square.”

Eric J. Friedman, executive partner at Skadden Arps, did not return calls requesting comment.

Members of the Times Square Alliance, a business organization, are closely watching the pace of leasing there to see how quickly the 1.8-million-square-foot tower refills.

“Crowding in Times Square is a big problem right now,” said Tim Tompkins, president of the alliance. “It’s not just the costumed characters, but all the different people who are hawking and hustling there.”

Theater owners are enjoying record attendance. But some of them are also worried that the proportion of tourists is on the rise while the number of New Yorkers is declining. That does not bode well, they say, when the high tide of tourism inevitably begins to ebb.

“I think everybody is concerned about the crowding issue,” said Robert E. Wankel, co-chief executive of the Shubert Organization, which operates 17 theaters. “We’re having a problem from our success. We spent a lot of time and effort cleaning up Times Square and now it’s the place everyone wants to be.”

These are a far different set of problems for Times Square than in the 1970s and 1980s, when the area was packed with pornography shops, massage parlors, prostitutes, pimps and drug dealers. New Jersey commuters arriving at the Port Authority Bus Terminal, just west of Times Square, routinely avoided 42nd Street, as did many retailers and corporate office tenants.

But a concerted effort by state and city officials to rejuvenate the area began to pay off in the 1990s. Developers built skyscrapers and attracted tenants with special tax incentives. There were new hotels and residential buildings. Retailers returned to Times Square.

The American Eagle Outfitters store at Broadway and 46th Street was once home to the Gaiety Theater, a gay male strip club. The commuters who used to avoid the Victory Theater, where the 42nd Street marquee promised “Best Porn XXX in Town,” now flock to the child-friendly New Victory Theater in a beautifully restored building.

Since 1996, the number of tourists visiting Times Square every year has doubled to an estimated 40 million. The tourists have attracted a growing number of people dressed as Elmo, Spider-Man and other cartoon characters.

The latest crowd surge in Times Square began in 2009, after the city closed a stretch of Broadway between 42nd and 47th Streets, creating a series of public plazas and nearly doubling the amount of pedestrian space. As a result, the number of pedestrians in Times Square has jumped to as high as 480,000 a day, from about 350,000 before 2009.

“Foot traffic has increased,” said Jeffrey S. Katz, who owns several buildings in Times Square. “The retail is doing great; hotels are doing great. The plazas just exploded the rents. It’s beyond even my imagination.”

Annual rents for street-level retail space have quadrupled since 2008, according to Cushman & Wakefield, a commercial real estate broker.

The digital billboards slung across nearly every building in Times Square are also booming, with one executive estimating that they generate more than $100 million a year in ad revenue. The new sign at the Marriott, eight stories tall, generates more than $2.5 million in four weeks.

Yet, average rents for office space are still well below where they were before 2007. Some of the companies that were part of the Times Square resurgence in the 1990s, like the mass media company Bertelsmann, have left. Still, Times Square has been able to attract a number of technology and Internet companies, including Microsoft, Snapchat, China Central Television and Yahoo.

A survey conducted by the Times Square Alliance in May found that one of every four building owners, office workers and property managers in Times Square was “dissatisfied” with overcrowding, the construction of the plazas and the costumed characters.

“The recent overcrowding problems of Times Square have been caused in part by the construction of the plazas,” said Douglas Durst, chairman of the Durst Organization, which owns 4 Times Square. He also said the city needed to address what he described as a proliferation of aggressive costumed characters and vendors that have contributed to the gridlock.

All are hoping to avoid a situation Yogi Berra once described: “No one goes there anymore; it’s too crowded.”

“Our concern,” said Ellen Goldstein, vice president for planning and policy at the alliance, “is that the public realm is so unpleasant that we may at some point hit a tipping point, where companies won’t take space in Times Square. We’re not there yet, but the data is telling us we could get there.”