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IN I992, WHEN GERMAN MEDIA conglomerate Bertelsmann purchased 1540 Broadway for its U.S. headquarters, it got the chance to consolidate many of its divisions, such as Arista Records and Bantam Doubleday Dell. It snapped up the prominent 44-story, 1 million-square-foot Times Square office tower at a bargain-basement price of $119 million--less than half of the Citicorp mortgage on the building. The move enabled the company to control its own facility, as well as its long-term costs.
The downside: Tens of millions of dollars were needed to finish the financially troubled building that includes 150,000 square feet of retail space. Losses on a Fifth Avenue lease had to be factored in as well.
Today, real estate experts agree that Bertelsmann did a "fantastic" job. Each of its book imprints and labels is housed on floors that feature their own look, from hip to sedate. Retail space is occupied by the Official All-Star Cafe, which opened in December, and a 75,000-square-foot Virgin record store and Sony theater, slated to open this week. Slightly less than two floors are devoted to a city-sponsored business incubator that provides short-term leases on office space primarily to European start-ups interested in testing the New York City waters.
"It's a tremendous win-win situation for us. We are clearly running more efficiently today, several notches below industrywide...