The Neighborhood Changer

After the demolition of Alexander’s in 1999, The New York Times called the site “one of the world’s most valuable holes in the ground,” though the neglected building had been a blight on the neighborhood for years. Then, after more than two years of negotiations, Vornado struck a deal in 2000 to develop the site, with Bloomberg LP as the anchor tenant (Michael Bloomberg was still a private citizen then). Construction began in 2001, but was not finished until 2005, due to design difficulties.

The building, designed by Cesar Pelli of Pelli Clarke Pelli, has not changed hands since its construction. Of the 1,307,000 square feet of total space, 174,000 feet belong to premier retailers in the building’s ground and first-floor, glass-box units, such as H&M, Home Depot, and the Container Store. Atop the steel-framed business tower sit 105 luxury condos, all of which sold before the building opened.

Vornado erected another two-story, glass-box space at 968 Third Avenue, at 58th Street, to fill out the neighborhood, both in design and clientele; and it owns the brushed brass and limestone Architects & Designers building at 150 East 58th street. That 39-story mixed-use tower, a trophy for both its history and appearance, is the penultimate building in Vornado’s east midtown collection. The REIT owns other buildings linked to design, such as Chicago’s Merchandise Mart. But the Bloomberg Tower is the capstone.

And has this strategy paid off? Vornado would not comment for this story, but retail leasing in the region has perked up significantly since the Bloomberg Tower’s arrival, with other buildings in the area renovating and a new, livelier strip of retail sprouting on Third Avenue. (Office rents in the area, and not necessarily in the fully leased Bloomberg Tower, run generally into the $40s and $50s a square foot, according to Yale Robbins.)

A Times article from 2006 credits the tower with the increased activity. “Real estate owners and retailers in the neighborhood are also upgrading their properties. … Other retailers east of Third Avenue, an area that has traditionally had more service-oriented retailing … said they were feeling the pinch of the Bloomberg Tower, either in the form of rising retail rents or more competition for the potential customers.”

The Neighborhood Changer