Landmark gets a proper setting
Empire State revamp reflects Penn Station area's growing importance
December 22. 2007 12:14PMBy: Cara S. Trager
Louis Hedgecock's company is going to the right place at the right time.
In March, design firm BBG-BBGM will trade its longtime Madison Avenue digs for a 30,000-square-foot, light-drenched floor in the Empire State Building, which is getting a $500 million makeover. The iconic skyscraper is on a corridor that's attracting important office and retail tenants, and slated upgrades will make the area's transportation and entertainment facilities world-class.
"We think it's a good time to get in on the ground floor of a changing neighborhood," says Mr. Hedgecock, managing partner at BBG-BBGM.
Many businesses are on the same page. Last year, Starbucks signed a lease in the Empire State Building—whose revamp will include a new lobby, windows and elevators, and reconfigured floors to accommodate larger tenants—for what will be its biggest location in the city.
The project signals the revitalization of an important gateway neighborhood. If plans announced this year come to fruition, the Penn Station area may become one of the most active in the city.
Retail rents along 34th Street have skyrocketed in the past two years, to as much as $800 a square foot. Arrivals in 2007 included Bebe, the stylish women's clothier, and surf-wear shop Billabong. J.C. Penney leased a 150,000-square-foot store at the nearby Manhattan Mall, on Sixth Avenue between 32nd and 33rd streets.
At year-end, Jeff Sutton, the owner of 27 W. 34th St. and 29 W. 34th St., began demolishing both properties to make way for two three-story buildings, one of which will be leased entirely by shoe company Geox. According to real estate insiders, Apple is putting up a two-story building on 34th Street, though it is unknown whether the company will occupy or sublease the property.
Other major players buzzing around the neighborhood include Nordstrom, which has reportedly looked at several locations, and Merrill Lynch, which is considering the Hotel Pennsylvania as a headquarters site.
On the screen
"[34th Street] has just gotten more on everybody's radar screen because there's not a lot of space available," says Jeffrey Roseman, executive vice president of Newmark Knight Frank.
It's just the beginning. Penn Station's transformation has been inching toward reality for years. In 2007, those plans were folded into a more ambitious, $14 billion redevelopment proposal. It includes a Moynihan Station within the James A. Farley Post Office building and a new Madison Square Garden within Farley's western annex.