Tishman-Disney team awarded 42nd street hotel development

Real Estate Weekly, May 17, 1995

Governor Pataki and Mayor Giuliani were joined in the announcement by John Tishman, chairman of the Tishman Realty & Construction Co. Inc., and John T. Livingston, president of Tishman Urban Development Corporation.

"This $303-million project is the cornerstone of the redevelopment of 42nd Street. Tishman and Disney are known as visionaries. They realize that we are standing in the middle of the world's greatest entertainment district" the Governor said. "They will provide the bricks and the mortar, the imagination and the talent. New York State and New York City will provide the opportunity and the desire to work closely with the private sector to bring about change. Together we'll make a great team. Together we'll make a great 42nd Street."

"The revitalization of 42nd Street is one of the largest urban renewal programs ever launched in the country, and the largest ever jointly undertaken by New York City and New York State. Nearly 20 million tourists visit the Times Square and 42nd Street district each year, and it is our responsibility as one of the world's preeminent cultural cities to bring back this area's legacy of radiance and vitality," Mayor Giuliani said. "I am confident that the team of Tishman and Disney, the City and the State will form a dynamic and multi-faceted partnership that will lead this historical district to center stage where it belongs."

The selected proposal includes retail and entertainment attractions along 42nd Street, totaling 137,145 gross square feet; 10 to 12 new super signs; a potential time-share facility of 119,047 gross square feet; and a tourist and convention hotel with 615,017 gross square feet, including 680 rooms and 50,000 square feet of meeting space. Construction on the project is expected to begin next spring.

Tishman will develop, own and manage the entertainment component, for which Disney Development Company is exploring concepts for retail entertainment either for itself, or with third parties. Other high-profile tenants who have expressed interest in pre-leasing entertainment space include: Sega, ESPN, and Sony IMAX. The hotel will be developed, built and operated by Tishman. In addition, Disney has an option to own and operate time share units.

Dream Team Associates is wholly-owned by Tishman Realty & Construction Co., Inc., one of the world's largest owner/builders of real estate projects. Tishman has built over 220 million square feet of space nationwide. Tishman's construction projects include: EPCOT Center in Orlando; the World Trade Center in New York; the John Hancock Center in Chicago; and the renovation and restoration of Carnegie Hall.

Tishman also has significant experience in owning and managing large hotel projects. The company owns and operates more than 8,000 hotel rooms in the U.S. and the Caribbean. Among the hotel projects in which Tishman is both developer and asset manager are: the 2,270-room Wait Disney World Swan and Dolphin hotel complexes in Florida; the 815-room Hilton at Wait Disney World Village; and the 1,200-room Sheraton Chicago Hotel and Towers.

"We at Tishman are honored to have been selected as the developer for Site 7 and are truly excited at the prospect of helping to build a new gateway for the intersection of 42nd Street and Broadway. It will contribute to the renaissance that will bring back the past glories of the "crossroads of the world'," said John Tishman. "This project is proof that the public sectors can work together to accomplish great things, stimulate our economy and create jobs."

The State and City, with Dream Team Associates, (DTA) have entered into a preliminary agreement that describes the basic terms upon which the selection was based. Over the next four months, the parties will put these agreements into final project documents.

The financial terms of the deal include direct payment to the City and State of payments in lieu of taxes (PILOTs), base rent, and percentage rent, with a total net present value of $56 million over the term of the lease. The collateral benefits to the State and City after opening of the project, include non-real estate tax revenues of more than $14 million annually and generation of approximately 1,620 jobs. During construction, the project is expected to generate 3,680 jobs, and approximately $29 million in City and State tax revenues.

The proposed design offers a dazzling new gateway to 42nd Street. Arquitectonica, the design architect, has created a unique meteor-shaped time share facility with a glass mosaic facade that suggests picture postcards from a trip to New York City. This will all be set against a backdrop of a 47-story convention and visitors' hotel, which includes a light show that explodes onto the facility into a spray of "pixie dust."

Super signs with new technologies and the juxtaposition of different shapes and angles enhance Diller Scarfidio's design for a sign-tower multimedia icon at the critical corner location. Architects D' Agostino Izzo Quirk have designed an urban entertainment and retail center that combines old and new facades, and continues the tradition of diversity and juxtaposition at street level.