Times Square is increasingly becoming a residential neighborhood, according to a new demographic and retail study provided to The Real Deal.
The Times Square area has seen a 15 percent increase in the number of households since 2004, the study, by HR&A Advisors and the Times Square Alliance, shows. The majority of its residents are between the ages of 25 and 34. The number of households in Times Square in 2004 totaled 33,360, while the figure is now 38,272. “It’s a real New York neighborhood now,” said HR&A’s Kate Coburn, who was responsible for the report.
The report attributes the increase in residents to the “explosive growth” in nearby Hell’s Kitchen and the diversification of high paying jobs in finance, professional services, media, arts and publishing based in and around Times Square. Since 2004 the number of Times Square employees has also increased 15 percent to 200,000, with one in four Midtown employees working in the neighborhood.
“The demand created by these young, well-educated, high-earning residents and the 200,000 area employees can stimulate continued economic growth in the Times Square area,” the report speculates, “particularly growth in the retail and food & beverage sectors. The Times Square area can capture up to $2.1 billion in potential earnings in these two sectors.”
Though the Times Square market is typically thought of as geared towards tourists, more than half of those potential earnings could come from money spent by residents and office workers, the report says.
However, Lisa Rosenthal, a retail broker at the Lansco Corporation, said that while Times Square will always be a top retail destination, its increasing number of residents may not be a driving factor for tenants to lease space in the area. “While residents and potential shoppers are a great addition to the retailers, I’m not so sure that in this particular instance that really drives retailers to Times Square,” she said.
Times Square will always be a huge draw for tenants, she noted, but its appeal is based around the excitement and novelty of having its name and logo featured at one of the world’s most famous junctions as opposed to its ability to attract resident New Yorkers. She added that the additional residential population is potentially more significant for retailers and restaurants considering space west of Eighth Avenue, as those stores primarily attract local shoppers.
Certainly, retailers and investors have appeared bullish on the Times Square market in recent months. Retail rents also up. The “bowtie” heart of Times Square, from 42nd Street to 47th Street, experienced a 28.3 percent jump in the first quarter of 2012, according to a recent report by Cushman & Wakefield, averaging $1,967 per square foot.
The Midtown-based real estate investment trust SL Green Realty and partner Jeff Sutton purchased a small, mid-block office building on 46th Street earlier this month, which they plan to demolish in order to expand the selling area at a large retail project they are developing in Times Square, The Real Deal previously reported. And 1 Times Square has finally landed a tenant for part of its 55,000-square-foot vacant retail space; a Russian restaurant company, backed by chain Global Food International, leased 25,000 square feet on the ground floor and mezzanine, last month, the Wall Street Journal reported.
Developers may also be looking to cash in on increased demand for residential properties in the neighborhood. Developer Larry Silverstein’s Silverstein Properties is said to be planning a 60-story residential and retail tower nearby at 514 Eleventh Avenue, between 40th and 41st streets.