Smart moves in Times Square.

Times Square may not be a bastion yet for luxury retailers like both Madison or Fifth Avenue are, but the considerable class A office market that has emerged in the area within the last decade has helped lift the storied bowtie's retail from the kitschy and downright sleazy to what is now considered a far more sophisticated and corporate mix.

According to many prominent brokers and building owners, and evident to anyone who strolls through what is considered by many to be the loftiest retail market in the entire country, Times Square has shed its status as a stronghold for dollar discount shops, cheap delis, and generic electronics stores. Gone certainly are the seedy businesses and criminal hangouts of yesteryear. In place of the area's less desirable predecessors are flagship stores for well-known brands like Quicksilver and Billabong, retailers who have sprung up within the last five years grabbing highly visible storefronts and garnering much attention for the staggering profits they reap.

"Both Billabong and Quicksilver are taking in between $2500 to $3000 per square foot, which blows away the $500 to $600 average take of a retailer in the city," said Jeffrey Roseman, a retail broker at Newmark.

Quicksilver and Billabong aren't the only household names taking space in the area. The Gap, Toys 'R Us, Swatch, and Red Lobster all have made Times Square home to their crown jewel stores and a slew of other big names have plans to enter the neighborhood in similar fashion. Microsoft is rumored to be considering a major showroom in the heart of the bowtie at 1 Times Square, a property being repped by a Newmark team. Pepsi, Coca-Cola, and General Motors are just a few said to be considering spaces in the area as well.

The influx of nationally known corporate retail tenants hasn't been based solely on the attractiveness of tapping Times Square's unparalleled foot traffic and sales, but also as a way to take advantage of the area's branding opportunities in a method alternative to purchasing costly billboard space.

"The area is attracting a broader base of retailers because it's a magnet for branding," said David Green, a retail broker at C&W, part of a team handling the high profile search for a retail tenant to replace Howard Johnson's landmark restaurant at 1551 Broadway.

"Instead of spending $2 million on a billboard, a company like General Motors will open a showroom to promote themselves and it will grab tons of attention, much like Apple did when it started opening up stores in the city," Roseman added. "New Yorkers never had a reason to be in Times Square because the area was so hokey, but now there's hotels and offices and all these retailers and it fits together and feeds off of one another."

The presence of big name retailers reflects the changing tastes of a neighborhood that now boasts roughly 20 million s/f of office space, including an impressive concentration of some of Midtown's newest and most striking glass towers right at the heart of the bowtie. The growing population of office tenants--which will only be helped by the construction of the Durst Organization's Bank of America Tower and Forest City Ratner's New York Times Building--combined with the existing presence of firms like Ernst & Young, Morgan Stanley, and Lehman Brothers, has created an increasing demand for better restaurants as well, a trend that may come to challenge the dominance that fast food type eateries have enjoyed in Times Square.

"You have restaurants like Bond 45 and Blue Fin joining the area," Green said. "When there are millions of s/f of office space with great tenants, they need places to shop and eat."

High-end retail maven, Faith Hope Consolo, who heads Prudential Douglas Elliman's retail group, doesn't see Times Square emerging as an area loaded with luxury retailers however.

"I don't think there are going to be high fashion tenants coming in," Consolo said.

But Consolo does see a trend of higher end tenants progressively advancing south down the Broadway corridor from luxury hotspot, Columbus Circle, which has been something of a beachhead for elite retailers.

"I put an Equinox gym, a Cosi restaurant and bakery cafe chain, Au Bon Pain, on 50th, 51st, and 52nd Street," Consolo said. "There's a Godiva store along that corridor between Times Square and Columbus Circle. So you can see the place is changing. The thing is, you don't notice the changes when there's only two or three new retailers, but when there's been as many changes as there have been lately in the types of tenants coming in, the area all of a sudden looks strikingly different."

Real estate developer and investor Jeffery Katz, who owns 1 and 2 Times Square, sees the northern part of Times Square as potentially being able to attract near luxury tenants previously unknown to the neighborhood. Having developed 1600 Broadway, a residential tower on the corner of Broadway and 48th Street with 30K s/f of retail space, Katz says he may be among the first to bag such tenants.

"You can literally throw a tennis ball from here to Rockefeller Center," Katz said. "This area in the middle of so many important office submarkets. Right now, we're looking at a number of restaurants and clothing retailers in line with the type of luxury transformation Times Square has begun to see. It's what the people who work and live in this neighborhood are interested in seeing."