Inside Times Square's Next Transformation
With Jared Kushner bringing a 59k SF National Geographic “immersive entertainment experience” to 229 West 43rd St, the “Cirque du NFL” taking up 40k SF in 20 Times Square and the shocking closing of the world-famous Toys ‘R’ Us location, many questions are being raised about the future of Times Square.
Although the “Crossroads of the World” has changed considerably since its shadier days, rising property prices and changing demographics have the landscape shifting, with traditional retailers on the run and experiential retail filling the void.
Under the vision of mayors Bloomberg and Giuliani, the Times Square of the 1980s—seedy, crime-riddled and lined with adult entertainment stores and other unpleasantries (depending on your proclivities)—became a different beast.
Cushman & Wakefield retail vice chairman Alan Schmerzler explains that Toys ‘R’ Us was actually the “pioneer” of what the Commercial Observer called Times Square’s “Disneyfication.” Hotels, restaurants, theaters, museums and even other global retail chains and brands followed suit, legitimizing Times Square as a family-friendly space.
But while many names of the first wave—Madame Tussaud’s, Ripley’s Believe It or Not!—still stand, many others, such as the WWF New York, Mars 2112, ESPN Zone soon shuttered. Theme restaurants and entertainment spaces seemed to just be a passing fad, and apparel retailers took their spaces.
But that’s no longer the case. Along with the NFL and National Geographic, Hard Rock International, Gulliver’s Gate (the “world’s largest miniature world”), Jimmy Buffett’s Margaritaville, the Grand Ole Opry and countless other tourist brands are taking up large chunks of what Eastern Consolidated senior managing director Adelaide Polsinelli calls "the epicenter of the world and everything game-changing."
"All eyes are on us, so it's becoming something more than retail," she tells Bisnow. "It's becoming a multifaceted tourist and pedestrian destination. It's about the experience of being there."
The main reason for this evolution is a simple change in demographics. Outside those with offices at Times Square, Alan tells Bisnow, the majority of pedestrians are tourists looking for unique, memorable experiences, rather than just soft goods.
Moreover, the controversial pedestrian pavilions—while attracting some shadier elements—have only increased Times Square’s walkability and potential as a tourist spot, and have been largely beneficial for the Square at large.
“It’s trending towards national tenants and it’s all about exposure,” says CBRE retail SVP Gary Trock, who represented the Kushner Cos on both the Gulliver’s Gate and NatGeo transactions. “From the exposure of Madame Tussaud’s, to Ripley’s, to all the shows in the market—and now by delivering Gulliver’s Gate and National Geographic—it’s going to attract more people wanting an experience across the board instead of looking at Times Square mainly as a shopping area.”
While Times Square's ludicrously high rents—average asking rent for ground-floor retail space can reach as high as $2,363/SF—can be a major pain for many retailers, Alan, Adelaide and Ariel Property Advisors VP Howard Raber insist that any costs are easily outweighed by the benefit of getting a company’s brand out in the world’s No. 1 tourist location.
"The sheer number of people that are in this area justifies the rent," Adelaide says. "You have that many spending pockets willing to splurge when they're there. It can be a full-day or full-week experience. There's enough to do there to warrant the rents being paid and charged."
Saying they’re a hindrance to any stable retailer isn’t exactly true, Howard adds. After all, he points out, while Toys ‘R’ Us, Aeropostale and Ruby Foo’s left the Square scene, other brands like Junior’s, Gap and Old Navy are taking their place. While selling bowls of cereal for $7.50 is one way to make up for an investment, Howard says that Kellogg’s is benefiting from the attention its brand is getting with its new “cereal restaurant,” especially with cereal sales waning.
These stores, Alan explains, aren’t phased by the rents, but are only focused on evolving their spaces and signage to still be visible, accessible and attractive to tourists, even from “fringe locations” outside the Bow Tie.
Hotels are evolving as well, with Maefield Development planning a $2B repositioning of 1568 Broadway, which will raise the Palace Theater by 29 feet, revamp the DoubleTree Guest Suites Times Square Hotel, and add a new retail and entertainment space and a massive LED screen.
In addition to the NFL Experience, 20 Times Square will also boast a 39-story, 452-room EDITION hotel. Billed as the “only anticipated five-star hotel in Times Square,” the hotel will feature 40k SF of dining and entertainment and, naturally, an 18k SF LED billboard.
With the radical advancement of technology, Alan says, a memorable Times Square experience may soon include things such as virtual reality, holographic augmented reality, digital projection and other experiences that make even IMAX look as sophisticated as a floppy disk.
For example, the old Times Square Theater at 217 West 42nd St will be redeveloped into an entertainment and lifestyle complex anchored by several virtual reality movie theaters. Gulliver’s Gate will include moving cruise ships, a working version of the Panama Canal and a full-body scanner that can make 3D-printed miniature versions of patrons to add to the diorama.
But what makes these experiences so different from other “tourist traps” of the past? Alan says the educational spin, longer length and awe-inspiring tech of these experiences give the tourists a sense that they’re not only getting something that they couldn’t get anywhere else in the world, but one that’s worth the price.
That’s not to say it’s been easy for them to set up shop in NYC’s tourist center. CBRE SVP Lon Rubockin told the Commercial Observer that the Kushner Cos were initially resistant to having Gulliver’s Gate as a tenant, as it was an unproven concept. Kushner only caved when two other prospective tenant deals fell through. And while Kellogg’s and other experience retailers have made a killing, it’s yet to be seen if these larger experience ventures are worth the investment.
Still, as NYC’s melting pot of tourism continues to draw millions every day, Howard says the need for new, interesting attractions and experiences will only increase and further set Times Square apart from other US cities.
Retail won’t vanish completely, and the desires of office owners won’t be ignored, he insists, but developers will be more focused on making Times Square a safe, quality entertainment sector. Moreover, Alan believes this trend will spread to other major cities and environments like Times Square.
“Times Square can’t survive on apparel alone,” Alan says. “This change is beneficial for the Square and the city at large. With properties like these, the Square is more diverse and family friendly, attracting more people and schools. They’re going to bring in a lot more people and a lot more revenue, an example many will follow.”