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The day after Morgan Stanley & Co. announced that it planned to buy the bankrupt office tower at 1585 Broadway, a prominent West Side property owner called one of the participants in the transaction.
"Thanks, for making me $100 million yesterday," he said.
That might not be hyperbole. By validating the Times Square area as an address for Fortune 500 companies, Morgan Stanley's $176 million has permanently altered the map of midtown Manhattan with profound consequences for values, rents and neighborhoods.
Real estate professionals say they already have seen repercussions from the deal, even though it is not scheduled to close until the end of September. Landlords of Times Square area office buildings, who used to be on the defensive in lease negotiations, are now asserting themselves more. National retailers, which used to look down their noses at the Times Square area, are expressing new interest. Owners and brokers are even talking about possible new development and getting rid of the pornography industry on 42nd Street and Eighth Avenue.
"Very fine tenants have now decided that this area has the customers for them," says Faith H. Consolo, senior vice president of Garrick-Aug Associates Store Leasing Inc. "We're no longer talking just about tourists. It's the office trade."
MANY TONY TENANTS
Morgan Stanley was not the first tony tenant to move west of Sixth Avenue. Prominent law firms like Cravath Swaine & Moore and Proskauer Rose Goetz & Mendelsohn moved to the West Side in the late 1980s. Last year, Bertelsmann AG, the German media giant, purchased 1540 Broadway, another bankrupt building in the Times Square area.
But with the Morgan Stanley deal, the area has reached critical mass. Not only has the investment bank lent its prestige to the Times Square area, it will channel the buying power of its 3,800 employees into neighborhood retailers when it moves there, starting next year. The transaction also has...