Developer Buys the Rights to Build a Times Square Tower

A Manhattan developer has acquired the right to construct a large office tower at the northeast corner of 42d Street and Broadway in Times Square, taking over part of a vast development proposal that has been stalled for 15 years.

The developer, Douglas Durst, has agreed to buy the rights to the site from a group headed by the Prudential Insurance Company of America. If Mr. Durst's plan succeeds -- and it is subject to approval by both the city and state, which is by no means assured -- his project would be the first new privately financed office building since 1992 in Manhattan, where an office glut has discouraged builders.

It would also break a logjam in the big development scheme for what New Yorkers once proudly described as the Crossroads of the World, an intersection that had grown tawdry and blighted since the 1950's but now shows signs of a renaissance in entertainment and shopping.

Prudential and its partner, George Klein, a large Manhattan builder, said they had agreed to Mr. Durst's terms in February, but no one involved in the deal would disclose how much Mr. Durst would pay. He has since submitted outlines of his plan to the city and state.

The site stretches from 42d Street to 43d Street, including the boarded-up hulk of the former Nathan's Famous restaurant, long a Times Square institution. In addition to the parcel controlled by Prudential, Mr. Durst would include adjacent property he owns, expanding the base of the proposed building by about 30 percent.

"The timing of this decision is based on what we see as the strength of the office market," he said in an interview, adding that he intended to build his office tower even if no large tenant is immediately found.

The Prudential group was selected in 1981 to develop four huge office towers on the south end of Times Square. It won the promise of long-term tax breaks from city and state officials, who hoped that the office buildings would lead a rebirth in the area.

But the plan provoked a torrent of lawsuits, and protests by civic groups upset at the huge scale of the proposed towers, which they said would overwhelm the congested intersection.

While the project was blocked by litigation, other developers began building at the north end of Times Square during the late 1980's, creating an office glut and postponing the Prudential plan.

Over the last two years, the Disney Company and other investors have moved in, investing heavily to renovate 42d Street theaters and open splashy new stores, sowing the seeds of renewal that were to have come from Prudential's towers.

Mr. Durst's plan contains an added twist because he and his company, the Durst Organization, had been among the most outspoken critics of the tax breaks offered to the Prudential group, saying they favored one builder over other property owners.

But now, Mr. Durst said, the time has come to build, and he intends to claim 35 percent of the Prudential group's long-term tax breaks, which apply to his building site.

Mr. Durst's plan comes when the office vacancy rate in midtown Manhattan has been shrinking, to 12 percent at the end of last year from a high of 17 percent in 1990, according to Cushman & Wakefield, a brokerage. He said he expected an increase in demand by 1999, the earliest his tower could be completed.

Top economic development officials for Mayor Rudolph W. Giuliani and Gov. George E. Pataki said they would like to see Mr. Durst's plan succeed. The city and state must agree to the transfer of tax breaks that had been pledged to Prudential, and to the design and size of Mr. Durst's building.

But John S. Dyson, the Deputy Mayor for finance and economic development, said he would insist that Mr. Durst have a commitment to his building by at least one large tenant as a form of insurance that it be built quickly. "As a business deal, we are not there yet," Mr. Dyson said.

State officials may hold greater sway over the plan, since the state, through its condemnation powers, has already acquired the land under Prudential's building sites, as well as several other parcels along 42d Street.

"I feel comfortable this deal will go ahead," said Charles Gargano, chairman of the Empire State Development Corporation. He said the agency planned a public hearing on Mr. Durst's plan for May 6. But like Mr. Dyson, he said some assurance that an anchor tenant has signed would be required by the state.

Mr. Durst, while saying he would be confident enough in his building's prospects even without an immediate commitment from a large tenant, said he was aggressively seeking one and might have a commitment within weeks.

But he denied speculation that Conde Nast, the publishing company, was interested in the site for a headquarters. "I've had discussions with them, but they did not go anywhere," Mr. Durst said.

Mr. Durst declined to say how large his tower would be, saying that that is being negotiated. But someone close to the discussions who insisted on anonymity said Mr. Durst wanted about the same square footage as Prudential had proposed, though the building would not be as tall because it would be on a larger site. Prudential's plan was for a 58-story building.

If Mr. Durst does not try to exceed the floor area that Prudential wanted, he seems likely to avoid some of the opposition the greeted the Prudential group in the 1980's.

The buildings at the other three Prudential sites -- at the southeast corner of 42d Street and Broadway, the southwest corner of 42d Street and Seventh Avenue and the northwest corner of 42d Street and Seventh Avenue -- are undergoing renovation at street level to accommodate 19 new stores, including gift shops and delicatessens, which are to open by the end of the year.

The work is being performed by the Prudential group as part of an interim agreement with the city and state two years ago that enables it to put off construction of its office towers until office demand picks up.

But with Mr. Durst planning his tower, the Prudential group may push forward its plan to build, said Michelle Demilly, a spokeswoman.

"Development on one site will certainly spur development on the other three," she said.