New York's real estate crisis

INCREASES in Manhattan property values are putting the squeeze on theaters in New York City. Whether individual artists, large Broadway houses on the West Side, or tiny avant-garde clubs in the East Village, those affected are confronting a severe financial challenge -- one that threatens the cultural preeminence of the city. A study commissioned by the city's Department of Cultural Affairs last year described a ``crisis'' situation for local arts groups. Rent increases of 100 to 300 percent have forced several nonprofit arts organizations to relocate to the outer boroughs. Others have simply ceased operation.

Of those nonprofit arts organizations that remain in Manhattan, more than three dozen are said to be in a real estate emergency. The Roundabout, Manhattan Punchline, and WPA theaters have all been ousted from their original locations because of rent increases. Nonprofit theaters are responding with a variety of moves -- sharing spaces, forming consortia, and, when possible, buying buildings.

Meanwhile, commercial Broadway theaters are facing their own challenges. A change in zoning restrictions on Manhattan's West Side has made these 30-plus theaters more valuable as real estate than as producing houses. The demolition four years ago of the Helen Hayes and Morosco Theaters to make way for the $450 million Marriott Marquis Hotel galvanized support for the remaining theaters. Yet significant challenges remain.

A two-year-old recommendation from the Theater Advisory Council, a city-appointed panel, proposes that in exchange for maintaining a theater the owners be allowed to sell their unused air rights to a developer within the designated district. The city, however, objects to permitting the theater owners this special dispensation.

The Shubert Organization, which plans to pursue the sale of certain development rights this year, objects to the stipulation that requires maintenance of the theaters in perpetuity.