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NEW YORK CITY-With insiders close to the deal reporting that lease conditions between Boston Properties and Arthur Andersen have been met, some still question the area’s ability to support so much new space. The new building is planned for an island surrounded by Seventh Ave., Broadway, 42nd St. and 41st St. and is expected to create 1.2 million new sf where a mostly empty office building now stands. This is the fourth tower planned by Boston Properties here.

Times Square, long a tourist destination, has emerged in the last several years as a spot for family entertainment. It has also become a destination for shoppers with a variety of retailers and for high-end businesses like Reuters. With neon lights and ads galore, it has become a symbol of capitalism, glowing in a flourishing economy.

The Arthur Anderson deal is, according to GlobeSt.com’s sources, for 524,000 sf of space in a 47-story building. Conditions upon which the deal hinges include Boston Properties actually completing acquisition of the property from Prudential Insurance Co. The office property and the Times Square Brewery there now will be torn down to make room for the new $600 million facility.

GlobeSt.com asked Richard Bernstein, senior managing director for Insignia/ESG, to share his perspective on whether or not Times Square can support another office tower and what the market slump might spell for the area. “When landmark properties are created in areas like Times Square, it makes the area that much more bold,” he says. “Those businesses that can absorb the class A pricing attract more feeder businesses–services and satellite organizations.”

Bernstein also notes that while the area has a few places to cater to weekenders, the business people working in the area “still don’t have a lot of choices in the way of restaurants. This is one aspect that hasn’t matured yet; it still has a way to go.” In describing the overall Times Square market he comments, “It is odd in that it blends huge corporate offices, retail, tourist attractions, theater, family entertainment and smaller businesses.”

According to a number of industry insiders, while the market has begun to show signs of moving toward “equilibrium,” when vacancies in offices occur, someone quickly “swallows” the opening. While Times Square is becoming increasingly saturated, according to Bernstein it is a unique entity that can support itself through its own diversification.

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