Urban Developers Rein In Their Plans

WITH tight budgets and high commercial vacancy rates, cities are beginning to think ``small scale'' in terms of new development projects.

Manhattan is a case in point. Efforts are under way here to bring back New York's famed ``Great White Way'' - but at a relatively low cost. The ``Great White Way'' is the Times Square area that was illuminated by bright lights and theater marquees between World War I and World War II. The area's glamour was best symbolized by the New Amsterdam Theater on West 42nd Street, once home to the Ziegfeld Follies musical revue.

The theater is now closed and parts of 42nd Street between Seventh and Eighth Avenues are best known for seedy video stores and panhandlers. But under a new $20 million ``interim'' development plan recently unveiled by local officials, West 42nd Street, including the New Amsterdam Theater, might once again shine with large illuminated billboards, giant rooftop TV screens, and scores of retail shops and restaurants. The money will go toward redesigning and renovating existing buildings, rather than erecting the giant skyscrapers proposed in the 1980s. The interim plan will retain Times Square's ``razzle-dazzle,'' ``honky-tonk'' characteristics.

Kent Barwick, president of the Municipal Art Society, says that 42nd Street needs to retain its ``entertainment characteristics,'' rather than become another ``Rockefeller Center.'' The interim plan, he says, makes the most sense for that area.

Development consultants say that what is happening in New York's Times Square area is typical of the challenges many major cities are facing. With the exception of commercial development projects already under way, ``new, large-scale development is essentially on hold in most major US cities,'' says Dennis Donovan, senior managing director of Wadley-Donovan Group Ltd., a corporate consulting firm in Morristown, N.J. ``There's virtually nothing new getting off the ground in most big cities.''

Cities are instead moving toward approval of more modest development projects, Mr. Donovan says. At the same time, the pace of corporate relocations to new suburban office complexes has slowed. The slowdown will continue into 1993 and 1994, he says, since many companies, concerned about the financial impact of the recession, signed short-term leases in the early 1990s.

In New York, the only major development projects on board involve either existing plans from the early 1990s like one proposed by Donald Trump, or selected state and city ventures involving public development bonds.

Facilities at the US Open Tennis center in Queens, for example, may be enlarged. And the state of New York, concerned that the New York Yankees may leave the Bronx for a new site at the Meadowlands sports complex in New Jersey, has just proposed using state development bonds to construct a $300 million stadium near Madison Square Garden in Manhattan.

Regardless of what happens with the Yankees, the changes around Times Square are significant. Three new office towers in the area that went bankrupt have been taken over by Bertelsmann AG, the giant German multimedia company, and Morgan Stanley, the New York investment house. These fiscally sound companies are starting to bring new tenants to the West Side. And the Walt Disney Company is reportedly considering occupying the New Amsterdam Theater.