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Travel & Holiday

View to a killing

Observation decks of the Empire State Building are turning in profits, not its commercial space
The Straits Times - December 31, 2011
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View to a killing Justin Bieber on an observation deck of the Empire State Building, as host of a lighting ceremony last month. -- PHOTO: ASSOCIATED PRESS

New York - The owners of the Empire State Building like to promote it as the most famous office building in the world.

But the real money-maker at the 102-storey skyscraper is not the 2.7 million sq ft of commercial space occupied by tenants such as the Federal Deposit Insurance Corp.

It is the view.

The cramped observation decks on the 86th and 102nd floors are startlingly profitable, especially during the holiday season, when tourists swarm the city.

The decks attract four million visitors a year and generated US$60 million (S$78 million) in profits last year, while the owners made little if any money on the office space, according to newly disclosed documents that offer a rare glimpse at the building's balance sheet.

The financial results at the Empire State Building illustrate how observatories, once considered a modest sideline and a pleasant diversion, have become big business for owners seeking to wring every dollar out of office towers around the world.

Ordinarily secret, the Empire State Building's finances are buried in a 529-page prospectus recently distributed to partners in the property as part of a proposal to create a US$5-billion publicly traded company featuring the building.

The Malkin real estate family, which controls the building, would not comment, saying that it was barred from discussing the property by regulators.

But other real estate magnates were deeply impressed by the revenue from the observatory.

'That's an astounding amount of money,' said Mr Richard S. LeFrak, whose family owns 40 million sq ft of apartment houses, office buildings and hotels in New York and New Jersey. 'I would never have guessed anything like that. But the Empire State Building is an iconic structure. People have been making that pilgrimage since they put it up.'

In Chicago, the owners of the Willis Tower, formerly named the Sears Tower and the tallest building in the United States, unveiled glass balconies for the observation deck in 2009 that allow visitors to look straight down, 400m, onto South Wacker Drive. Since then, attendance has jumped 28 per cent, to an estimated 1.4 million this year.

Top of the Rock, the observatory at 30 Rockefeller Plaza in Manhattan, reopened six years ago after a long dormancy and now pulls in 2.5 million visitors a year and a US$25-million profit, according to real estate executives who have been briefed on the project. 

Eight companies are now vying to operate what would be the largest and highest observation deck in the city - the one at 1 World Trade Center, the 540m tower under construction in New York.

Still, as it stands now, the unquestioned champion of observatories is at the Empire State Building. Even with adult tickets ranging from about US$20, for a trip to the 86th floor, to US$55, for those who want to avoid the lines and get to the top, attendance never sags.

Even in the 1990s, attendance at the higher, 107-storey observation deck at the World Trade Center never exceeded two million.

In the 1930s, when developers in New York City were competing to build the tallest skyscraper in the world, many buildings had an observation deck that offered panoramic views of a skyline less filled with towers.

It cost 40 US cents to ride to the 70th floor at 30 Rockefeller Plaza, in what was known as the RCA Building; 55 US cents to get to the observatory on the 60th floor of the Woolworth Building or the 71st floor of the Chrysler Building; and US$1.10 for the Empire State Building's observatory.

But that was long before the big crowds, high-speed elevators and timed ticketing turned observatories into profit centres.

 

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