The Empire State Building Has Made More From Its Observation Deck Than From Rent
Buildings are worth a lot. Buildings in Manhattan are worth even more—that’s some of the most expensive real estate in the world. Office buildings in Manhattan, you’d think, would be worth more still, with the most famous buildings being the most prized and most valuable. And yet if we turn our eyes to the Empire State Building, a skyscraper that was onetime the world’s tallest and maybe still the most famous, we see a building that ran at a loss for years.
Its big problem was it opened in 1931. The ’30s were a great time for skyscrapers if you wanted gorillas to come climb them, but they weren’t a great time for attracting tenants, because they were a great time for Depression. For decades, people called the tower the “Empty State Building” because the top 60 floors lay vacant as the economy rotted. The owners of the building petitioned the government to move offices there, and they held all kinds of publicity stunts, but still, tenants stayed away.
Even during this time, however, tourists paid good money to ride up to the observation deck on the 86th floor. During the Depression, tickets cost $20 in today’s money, but people paid it, which is amazing considering they were otherwise turning to cannibalism and demon worship out of desperation (we hear). By 1938, the observation deck brought in $18 million a year in today’s dollars, vastly more than rent did.
Starting in the 1950s, the building turned a profit, and the observation deck still led revenues for quite a while. By 2019—before the events of the following year flipped all accounting upside down—office leases beat the deck, but not by all that much, with the leases bringing in 45 percent of revenues and deck tickets making 38 percent.
While we all knew the deck was a tourist attraction, you might not have realized those guys on 34th street hawking tickets to go up were bringing in that much cash, any more than you’d think those drug dealers plugging standup shows were the premiere revenue source for the whole entertainment industry.
Still, the Empire State Building isn’t the craziest case of a New York building making its money from everything but leases. One Times Square makes tens of millions a year from its billboards. It’s also a 23-story office building … a 23-story perpetually empty office building.
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