According to a report on Deadline Hollywood, the Nederlander Organization, the second-largest theatre-owning company on Broadway, has sold the air rights to 20,000 square feet above the Neil Simon Theatre on West 52nd Street for $8.9 million to a consortium that's trying to build a new skyscraper a half mile south on Seventh Avenue between 40th and 41st Streets.
Property development in the Times Square area has become a complex and high-stakes game for multimillionaire developers. Here is a brief and simplified explanation of what the deal means.
First of all, the deal will not affect the Neil Simon Theatre in any obvious way, other than to put more money in the pockets of its owners and make them a little bit more financially secure, so they can go on running their Broadway theatres for years to come.
So what did they sell?
Anyone who has seen a photo of Manhattan knows that it's full of tall buildings. That's because land is so valuable on the small island, especially in neighborhoods like Wall Street and Times Square, that the only way to fit more people and businesses is to build upward into the air. That makes the air very valuable. On the other hand you have theatres, some of them 100 or more years old, that were built in a time when most of the Times Square area consisted of three- and four-story buildings. While most of those buildings have been torn down and replaced by skyscrapers, the Broadway theatres remain just a few stories tall.
So many of the old theatres were torn down during the 1930s-1960s that politicians showed rare vision by stepping in to save those that were left. Among the lifesaving steps was giving the owners permission to treat the space above the theatre as a hard asset. If local zoning regulations allowed a building in the neighborhood to go as tall as, say, 20 stories, and a working theatre on that site was only two stories, the owners could sell the remaining 18 stories worth of space as if it were actual real estate.
That way, someone on a nearby plot also zoned for 20 stories, could buy up the extra 18 stories, and put up a building almost twice as high and it would be okay with the city.
That's more or less what happened with this deal.
The actual deal works out to $445 per square foot — more than double the going price just two years ago, according to Deadline Hollywood. "The deal will allow Soho Properties, MHP Real Estate Services and Hampshire Hotels Group to bring the planned 238-key, $300-million hotel [on Seventh Avenue] to 29 stories almost 400 feet high."
This has happened several times before, which is why the Times Square area now sports skyscrapers that rival those in the Wall Street area — except that some of them stand right next door to cute little old landmarked Broadway theatre buildings. And thin air.
No timeline for the construction was announced.
The Neil Simon Theatre is currently dark, but booked with the upcoming holiday production, The Illusionists.
Ironically, the site of the proposed hotel was once occupied by one of those Broadway theatres torn down in the mid 20th century. The old Broadway Theatre (not to be confused with the newer one on 53rd Street) stood on the site from 1888 to 1929, and served as home for hits Ben-Hur and Little Lord Fauntleroy. It was one of the first to go after the start of the Great Depression.