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Vacancy Is Opportunity at 4
Times SquareCond Nasts Departure, and the Possible Exit of Another
Tenant, Leave a Lot of Space to Be Filled
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The building that helped transform Times Square from a brew of urban maladies to
a showcase of big-city rebirth has enjoyed a successful 15-year run thanks to a pair
of marquee tenants who kept it fully occupied since the day it opened.
Now, 817,000 square feet of space in 4 Times Square has hit the market as media
company Cond Nast completes its move to One World Trade Center. And another
826,000 square feet could come on line if law firm Skadden Arps Slate Meagher &
Flom LLP completes tentative plans to decamp to a new tower in Manhattan West.
The possible near-emptying of the building underscores the challenge for landlords
as the citys latest crop of new office buildings takes shape downtown and atHudson Yards. Big tenants are starting to opt for them over older spaces, leaving
behind owners with leasing headaches and the need to invest millions of dollars
into such things as upgrades, rent inducements and brokerage commissions.
For the Durst Organization, the owner of the 1.6-million-square-foot 4 Times
Square, the challenge is further complicated because the company is a part owner
of One World Trade Center and scored a leasing coup in 2010 when it convinced
The tower at 4 Times Square stands at the intersection of Broadway and West 43rdStreet. PETER J. SMITH FOR THE WALL STREET JOURNAL
Nov. 16, 2014 8:36 p.m. ET
ByDOUGLAS FEIDEN 1
COMMENTS
8/10/2019 Vacancy is Opportunity at 4 Times Square - WSJ
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Cond to pull up stakes and relocate.
Douglas Durst, the companys
head, says he is operating in
two very different markets and
isnt competing against himself:
The difference in rents shows
that the bulk of tenants still
prefer a Midtown location, he
said. The Midtown tenants
might sightsee downtown, but
they always end up making
deals in Midtown.
One trend working in favor of Mr. Durst, and other landlords losing tenants: the
Manhattan office market is improving thanks to a more robust economy and New
Yorks strong technology sector. Manhattans vacancy rate at the end of the third
quarter was 10.2%, compared with 11.5% in the second quarter of 2010, according
to Cushman & Wakefield Inc.
But vacancy is still well above the precrisis low of 5.3% in the second quarter of
2007, partly because businesses are determining ways to use space more efficientlyand the citys financial services industry has been contracting. Renting space in
Times Square also could be problematic because some tenants dont like the hordes
of tourists the entertainment district attracts.
It will take some time to rent, predicted Joe Harbert, president of the eastern
region for Colliers International. Theyll need to find a creative tenant for whom
the lights, glitz and excitement of Broadway are appealing and offset any
disadvantage from the crowds, street traffic and touristy feel.
Mr. Durst, 69 years old, said one possible deal could be unveiled by years end, and
if it comes to fruition it would be over 200,000 feet. The market is not as strong as
wed like, he added, but conditions are far better now than when he first
committed to 4 Times Square in the depths of the real-estate recession in the early
1990s.
Douglas Durst, chairman of the Durst
Organization. BLOOMBERG NEWS
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The buildings saga began a decade earlier in a grandiose city-state plan for Times
Square Center, conceived in 1981 and advanced by then-Mayor Ed Koch and
then-Gov. Mario Cuomo in 1984, a quartet of Philip Johnson-designed, mirror-
image towers at the Four Corners, the fabled intersections of Broadway, Seventh
Avenue and 42nd Street.
Times Square was a sewer, recalled William J. Stern, then-chairman of the states
Urban Development Corp. Dodge City was safer. Women and children vanished
after darkJohns and people who mugged Johns were everywhere.
Controversial for its overwhelming scale, the government plan was hobbled by the
1987 stock market crash, the brutal 1991-92 recession, and not least, 15 years of
fierce legal battles mounted by civic groups and two developers with Sixth Avenue
properties who decried taxpayer subsidies.
Those developers were the late Seymour Durst and his son, Douglas.
The project was finally halted in 1992. Meanwhile, tougher policing and
crackdowns on sex businesses encouraged private-sector developers to step in
The former Nathans Famous restaurant, at the southeast corner of Broadway and
43rd Street, was demolished before the 1996 groundbreaking for 4 Times Square.
BOBBY BOUCHER/THE DURST ORGANIZATION
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where planners failed, Mr. Stern said. For instance, Viacom arrived at 1515
Broadway in 1990, Bertelsmann bought 1540 Broadway in 1992, Morgan Stanley
came in 1993 and Walt Disney Co. completed its New Amsterdam Theater deal in
1995.
The next year, the younger Mr. Durst bought the development rights for a full
Broadway block between 42nd Street and the Nathans Famous restaurant on 43rd
Street. He also availed himself of the same subsidies he had opposed and used
them to build the 48-story tower that became the Cond Nast Building after its first
tenant.
It proved that Times Square was not a terrifying place, said Tim Tompkins,
president of the Times Square Alliance. That building literally has one of the best
and most accessible locations in the world.
The building turned out to be a financial success for Mr. Durst. It also spurred
development of the rest of the Four Corners, now home to the Thomson Reuters
Building at 3 Times Square, Ernst & Young headquarters at 5 Times Square and
Boston Properties Inc.s 7 Times Square, said Mr. Tompkins.
Mr. Dursts tower could continue to produce big profits. The two anchor tenants
now pay below-market rates, less than $60 a foot. By contrast, Conds lower
floors will be offered in the $80 to $85 range, while Skaddens upper floors could
top $90 by the time its lease expires in 2020.
By one measure, Mr. Durst cant lose: Under a lease-takeover agreement, the Port
Authority of New York and New Jersey, his partner at the Trade Center, is
responsible for Conds rent payments until its 4 Times Square lease expires in
April 2019.
Traces of Cond are vanishing from 4 Times Square. The Durst Organization next
year will begin a two-year, $80 million upgrade of the building to modernize the
lobby, spruce up the 42nd Street entrance, replace bathrooms, install mechanical
and generating plants and add destination-dispatch elevators.
The plan calls for removing the test kitchens Cond used for its Bon Apptit
magazine, Mr. Durst said. Also out is the lobby newsstand that sold its
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A-HED
publications.
One thing that wont change is the fourth-floor corporate cafeteria whose titanium
walls, swirling glass panels and romantic banquettes defined the Cond brand.
We will not touch a Frank Gehry masterpiece, Mr. Durst said.
Skaddens lease continues until a year later. Mr. Durst said he is operating under
the belief that Skadden is leaving. We are very happy to be getting more than
Skadden is paying or wants to pay.
Skadden confirmed only that it had signed a letter of intent to move to Manhattan
West, a planned Brookfield Property Partners LP development. Cond didnt
discuss the move out.
Meanwhile, area merchants mourning the loss of Conds expense-account patrons
fret that replacement tenants wont fill the gap. Were losing big firms, not
attracting them, and its already hurting our business, said Laura Maioglio, owner
of Barbetta Restaurant on West 46th Street, which hosted private parties for the
publisher and its clients.
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