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Go-ahead for new $1b tower to complete Times Square.

The last parcel of undeveloped land included in the 42nd Street Development Project, a plan that spurred Times Square's transformation from a seedy and dilapidated neighborhood into a thriving office, retail and entertainment district, will be the site of a new $1 billion office tower that will begin development in 2007.

A joint venture between SJP Properties and Prudential Real Estate Investors purchased the long fallow parcel, known as Site 8N, or 11 Times Square, from the Millstein family in July for over $300 million and plans to construct a 900,000 s/f, 600 feet tall office building on the site.

The directors of the 42nd St. Development Project, Inc., a subsidiary of the state economic development agency Empire State Development Corporation that controls the Times Square redevelopment zone, approved the general project plan for the development last week in what was a significant step in giving the developers the necessary approvals to begin construction.

As is standard for projects part of larger state or city redevelopment plans, the project will begin a period of public review in September and then, after that, an analysis of its environmental impact.

SJP Properties expects to begin construction in 2007 and written reports have estimated the development cost of the building to be around $1 billion.

The building, which will be adjacent to the New York Times building being developed by Forest City Ratner, provides further evidence that the westward expansion of the midtown office market is continuing to gain traction amid citywide tightening vacancy levels and rising rents.

In fact, although ESDC officials simultaneously approved an alternate plan to build a residential tower on the site--a plan identical to the one the Millstein's had for the site--Michele de Milly, a spokeswoman for SJP Properties, said that market conditions for office space leasing were so favorable that the firm wasn't considering doing anything but an office tower.

The building is being designed by FX Fowle Architects and De Milly indicated that it would be several months before renderings are available. ESDC has input over not only how large the building will be and its ratios of office and retail space, but also the placement of its entrances as well as signage components.

SJP Properties will construct a subway on the 42nd Street side of the building that will connect with both the Times Square Station's mezzanine and track levels.

If the developer constructs more than two stairways and escalators it will be entitled to a possible credit towards a $23 million project fee it will have to pay the ESDC.
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Author:Geiger, Daniel
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Aug 23, 2006
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