Bryant Park Office Rents Outperforming Rest of Midtown Manhattan Bryant Park, once a haven for muggers and panhandlers, but now an urban oasis, is seen from 452 Fifth Avenue. For decades, Bryant Park was known as an enclave of unsavory characters and menacing panhandlers, making the park an obstacle to the development of Midtown Manhattan's office district. But in the 1990s, the park was transformed into an urban oasis where office workers lunch and city dwellers gather to watch outdoor films. Since then, attitudes toward the park have decidedly changed, and rising office rents in buildings on the park have resulted in the area outperforming the rest of Midtown. High-rises near the park have been upgraded to top-tier office space. A study of 13 buildings surrounding Bryant Park conducted by the commercial real estate brokerage Jones Lang LaSalle found a vacancy rate that stood at 3.8 percent in the second quarter of 2012, while Midtown's vacancy rate hovered around 11.5 percent. For that same period, office rents in those buildings around the park were $78.29 a square foot, while Midtown rents in general were $63.40 a square foot. Jones Lang LaSalle's data showed that Bryant Park's office rents first diverged from the rest of Midtown and started taking off around 2003, shortly before construction began on One Bryant Park, a 51-story, 2.1 million-square-foot office tower on the northwest corner of the park, anchored by the Bank of America. Since then, a handful of other high-rises around the park have undergone extensive renovations to upgrade them to top-tier office space. Still to come is another overhaul of an existing high-rise, 475 Fifth Avenue on the east side of the park, as well as construction of a new 28-story office tower on the southwest corner of the park, to be called 7 Bryant Park. The new buildings and the substantial upgrades for existing buildings all serve to help solidify the area's status in the commercial real estate market. "Bryant Park is now established as a hub of top-priced office space, and the park itself is the nucleus of this submarket," said Mary Ann Tighe, a chief executive of the New York tristate region at the CBRE Group, a commercial brokerage firm. Viewing the Bryant Park area as a submarket may sound logical, but it actually required a drastic shift in thinking for New York's commercial real estate world. Midtown Manhattan's office district is scored by 42nd Street, a line that for decades separated the premium office buildings to the north from those to the south that were considered less desirable, Ms. Tighe said. "It's pretty funny, but in New York, you can be a block south of a dividing line, and people immediately apply a discount factor," she said. Since the northern side of Bryant Park is bordered by 42nd Street, that discount factor traditionally applied to most of the office buildings around the park - until recently. Ms. Tighe said that some canny commercial real estate investors, recognizing that perceptions of Bryant Park were changing, had bought buildings on the park for south-of-42nd-Street prices in the hopes of renovating and capturing north-of-42nd-Street rents. Two buildings whose owners have done that successfully are 1095 Avenue of the Americas, on the park's west side, and 452 Fifth Avenue, on the southwest corner of the park, Ms. Tighe said. "Not a single one of the tenants moving in there now say, "Oh my goodness, we're two blocks south of 42nd Street," " she said. "In fact, what they say is "Wow, we're on Bryant Park in a great building." " At the 30-story 452 Fifth Avenue, the last phase of about $32 million in capital improvements and renovations is being completed, said Ehud Elizur, the president of PBC USA Real Estate, a subsidiary of the Public and Building Corporation, an Israeli public company, which is in turn the real estate arm of IDB Group. The company purchased the building for $353 million in 2010. From May through December 2011, PBC was able to lease 14 of 18 available floors to financial and law firms, which will begin moving in at the end of this year. While Mr. Elizur did not reveal those rents, the small amount of space currently available in the building has asking prices of $90 to $100 a square foot. Correction: October 5, 2012 An article in the Square Feet pages on Wednesday about office rents around Bryant Park that now outperform the rest of Midtown Manhattan described incorrectly the location where 7 Bryant Park will be built. As an accompanying map correctly showed, it will be on the southwest corner of the park, not the southeast.