The New York Times: Top-Floor Attractions Help Maximize Revenues
June 01, 2015
Up on the Roof: Top-Floor Attractions Help Maximize Revenues
In a city crowded with venerable towers and gleaming new skyscrapers, builders and developers are trying to squeeze more money out of their real estate by taking advantage of one of their last available spaces: their rooftops.
Cocktail lounges and restaurants have popped up on the tops of hotels, office towers and residential buildings, offering views of the city’s skyline, its bridges and waterfront, as well as $20 mixed drinks.
Even higher are observatories in the tallest skyscrapers, which are tapping into the city’s soaring tourism market. The city’s highest perch officially opened on Friday, when five elevators started whisking visitors 1,268 feet up to the 102nd floor of 1 World Trade Center — in 48 seconds — for “helicopter views” of Manhattan and beyond.
This comes as no surprise to the current generation of high-altitude revelers. While the appetite for rooftop play areas remains voracious, real estate experts say the same is not true for the highest of spots: When it comes to observatories, they say, the city may be nearing a view glut.
“You could end up with too many observatories and not enough people,” said Joseph Reagan, a senior real estate analyst.
Just take a look.
The new trade center observatory will compete for visitors with two heavily trafficked viewing sites: Top of the Rock, at 30 Rockefeller Plaza, and theEmpire State Building, the gold standard of observation decks with 4.3 million visitors last year.
And more are on the way. On the Far West Side of Manhattan, one developer has designed a two-story, outdoor observation deck-bar-restaurant that will be cantilevered over the Time Warner Building, 1,100 feet above Hudson Yards, at 33rd Street and 10th Avenue.
Next to Grand Central Terminal on East 42nd Street, another developer has planned an observatory at the top of One Vanderbilt, a proposed 63-story office tower.
Underscoring how popular the sky-high trend has become, Zagat, the restaurant guide, recently issued its list of the “10 Hot Rooftop Scenes in NYC.”
“It’s the view,” said Alison Calegari, a digital marketing specialist, as she sipped a glass of wine on a recent weekday at the Skylark, a cocktail lounge on the roof of an otherwise nondescript building on West 39th Street in the Fashion District. “It’s summertime. I want to see the light, not darkness.One World Trade Center is more touristy; this is more authentic.”
To get to the Skylark, Ms. Calegari entered a barely noticeable door on a side street, rode up 30 stories in a freight elevator and climbed two flights of narrow stairs, as if entering a speakeasy. There she found an outdoor deck with a six-foot glass wall that puts patrons practically face to face with the surrounding buildings.
Nearby, in Times Square, the Knickerbocker Hotel is opening a rooftop space that will feature dishes from the celebrity chef Charlie Palmer as well as a cigar lounge.
In Lower Manhattan, a developer is reopening a boutique-size, glass-enclosed observatory at the top of a 66-story tower at 70 Pine Street as part of a four-story restaurant and bar.
Still, heights are not for everybody.
Only a fraction — 13 percent — of the 56.4 million tourists who poured into New York City last year visited the top of the Empire State Building or the Top of the Rock. And the strengthening dollar could put a crimp in foreign tourism, the bread and butter of observatories.
“There will certainly be some growing pains in the next year or two as the market goes from two to three observatories, especially since the novelty factor of 1 World Trade Center is likely to attract a lot of visitors initially,” said Mr. Reagan, who works for Green Street Advisors, a real estate research firm.
One developer, Gary Barnett, has already scrapped plans to put an observatory atop the slender 1,775-foot tall Nordstrom Tower he is building on West 57th Street, saying he would rather sell condominiums than sacrifice valuable square footage. “You need express elevators, staircases,” Mr. Barnett said. “It costs you square footage on every floor.”
The renewed interest in observation decks has been spurred in large part by the enormous success of the Empire State Building, which has an outdoor deck on the 86th floor and an indoor deck on the 102nd floor.
The number of visitors at the Empire State, one of the most recognizable buildings in the world, has risen year after year, with annual revenues more than doubling to $111.5 million last year, from $40 million in 2004. The deck, whose profit last year was $82.5 million, now accounts for 40 percent of the building’s entire revenue.
Despite the appeal, the use of rooftops for dining, drinking and entertainment is not a new development. Before air-conditioning, rooftops made public assembly possible in the middle of the summer. The Astor Hotel, which opened in Times Square in 1904, had a vast rooftop garden with pergolas, tempiettos, triumphal arches, fountains, arcades and a bandshell.
Over time, however, they fell out of favor and the roofs of hotels and office buildings were more likely to be packed with air-conditioners, fans and power generators.
But now even rooftops of small buildings — at least by New York City standards — have become fashionable gathering spots. One of the first, which opened several years ago, was a lavish outdoor garden and indoor bar on the rooftop of the 20-story office building at 230 Fifth Avenue. It once boasted a $1,200 margarita, the Frozen Fifth Avenue, a mixture of expensive spirits served in a specially designed glass.
Today, there are chic rooftop scenes at the Gansevoort, the citizenM and the Jane hotels, among many others. At 75 Rockefeller Plaza, RXR Realty is adding multiple outdoor decks to the 33-story office building, not to attract paying customers but to lure new tenants.
“It has nothing to do with height, although views make them more special,” said Richard J. DeMarco, a partner at the design firm Montroy Andersen DeMarco, which worked on the World Trade Center observatory as well as a roof deck at 160 Fifth Avenue, a 10-story office building. “A rooftop space puts a commercial building on the map.”
Adam Rose, a developer, is converting 70 Pine Street, an Art Deco building near the New York Stock Exchange, into what promise to be the most expensive rental apartments in Lower Manhattan, with a restaurant and bars on floors 62, 63, 64 and 66 to be managed by the team behind the Spotted Pig, the celebrated West Village restaurant.
He is restoring the observatory, where diners will have unobstructed views and the ability to walk out onto the narrow terraces. Mr. Rose is spending $5 million to create an amenity for tenants and a downtown nightspot.
“This is a major element of making 70 Pine Street special,” Mr. Rose said. “It adds value to everything below it.”
Mr. Rose’s project is not designed to compete with the big observatories and will never attract millions of tourists. But like Top of the Rock, the outdoor terraces on the 66th floor of 70 Pine will offer visitors a sense of being among the city’s skyscrapers, rather than looking down on other buildings from the clouds.
For now, 1 World Trade Center has all the latest technology, a steak house and panoramic views of New York City, the harbor, Long Island, Bear Mountain and western New Jersey. Legends, the company that runs the observatory, spent nearly $80 million, according to executives from the Port Authority of New York and New Jersey, up from its original $62.5 million budget.
Legends hopes to draw about 3.2 million visitors, or roughly a quarter of the tourists who made their way downtown last year to visit sites such as the National September 11 Memorial Museum, Wall Street, the Statue of Liberty and the South Street Seaport.
But David Checketts, chief executive of Legends, said he was not worried about the competition or whether New York has reached an observatory saturation point.
“I imagine the Empire State Building has upped its advertising budget,” he said. “It’s an elevator ride and a view. There’s Top of the Rock and there’ll be others. They’re kind of back in vogue. But I do think this one will be highly desirable, because we’re next to the September 11 Memorial, the museum and a resurgent downtown.”