Apartment living, hotel amenities come together at Herald Towers

Real Estate Weekly, July 19, 2000 by Philip Lerner

With its expanding residential base, the blossoming of the 34th Street retail corridor, central location atop almost every subway line in the city and its convenient proximity to the burgeoning Times Square office and entertainment district, the Herald Square area is emerging as the true epicenter of New York City living for both the long-term tenant and the short-stay business traveler.

Less than 11 months since creating apartment-style living opportunities for short-stay corporate travelers, 60 furnished apartments at JEMB Realty Corp.'s landmark Herald Towers property on 34th Street in Manhattan's Herald Square are operating at full occupancy.

JEMB acquired the million square-foot former McAlpin House on the southeast corner of Sixth Avenue and 34th Street in August of 1999, and immediately instituted a $10 million renovation plan that when completed will include a new lobby and marquee, rebuilt bathrooms and kitchens, a business center and extensive telecommunications upgrades, including high-speed Internet access in all apartments.

Currently 100% occupied, Herald Towers, built in the 1920's, is comprised of 700 rental apartments, including the 60 furnished rental units. Feathered Nest is the exclusive marketing agent for the apartments, which feature 30% more space than standard NYC units.

Feathered Nest's Jacqueline Sim, who runs the furnished rental division at Herald Towers, is well known throughout the industry for her expertise in this unique property type. Ms. Sim attributes the swift success of the furnished apartment program to JEMB's hands-on management style and the creation of a unique concierge and tenant amenities service that rivals the finest Manhattan hotels at a fraction of the cost. Ruth McCoy of Feathered Nest handles long-term rentals at Herald Towers, which are also currently 100 percent leased.

Each tenant at Herald Towers has access to the New York Sports Club, which is located on the penthouse level. Concierge services, under the direction of Tenant Relations Manager Jamie Byrnes, include restaurant reservations, theatre and sporting event tickets, museum information, tour information and reservations, special event planning, arrangements for flowers, gift basket and balloon deliveries, detailed shopping information and much more.

In addition, residents of Herald Towers have access to housekeeping, laundry and valet services, and local supermarket and gourmet food deliveries.

Furnished apartment resident enjoy free basic cable plus HBO service through Time Warner Cable; video cassette players; direct dial local phone service; free in-room fax access upon request; welcoming gift baskets; and a host of other services.

Already a major player in the Herald Square market, JEMB Realty's Herald Towers is located directly across the street from another of the firm's prime properties, the 250,000 square-foot Herald Center retail complex, which includes Toys R Us and Daffys as major tenants, as well as the largest Department of Motor Vehicles (DMV) office in Manhattan. The Herald Towers property also includes a 100,000-square-foot retail block component which houses one of the Country's top-producing Gap stores.

The area bounded by 23rd and 34th Streets along Sixth Avenue is an interesting example of the symbiotic relationship between commercial development and residential growth. This district has evolved from a predominantly commercial destination into a desired residential neighborhood, with numerous residential developments and redevelopment projects currently underway that are single-handedly changing the dynamic of this area.

As major retail chains such as Old Navy, the Disney Store and the city's first K-Mart continue to make 34th street their home, the attractiveness, convenience and desirability of living in the area is greatly enhanced. The comer of 34th Street and 6th Avenue is at the epicenter of this change.

We have seen the residential rental rates in this marketplace rise between 20 and 30 percent within the last year. The availability rate at Herald Towers has consistently remained below one percent since we acquired the property in the summer of 1999. This record result can be easily attributed to a number of positive factors. Herald Towers is currently benefiting from the boom in Times Square, from being centrally located and easily accessible by public transportation and from the higher caliber of retail stores moving to the area. Our tenant demographic is now comprised of young professionals that work all over Manhattan, whether in the media industry and commuting to Times Square or in the financial sector on Wall Street.

These factors and more convinced us of the vitality of this area and its promise for continued growth. This has led us to invest considerable resources into capital improvement programs at our Herald Square properties.

We foresee this upward trend continuing. The overall perception of this area has changed permanently and we are committed to being a part of the future of this emerging neighborhood.