This past Saturday night in Times Square, a blocklong billboard flashed “Welcome Back NYC.” On the street, lines formed outside of some stores, including a newly opened Taco Bell Cantina.

Nearby, costumed characters, from the Statute of Liberty and Spider-Man to Mickey Mouse and Sesame Street’s Elmo, posed for pictures with eager tourists. Break dancers gathered an audience in a big circle, and artists were busy with portraits or caricature sketches. The smells and smoke from an array of food trucks permeated the air.

More than a year after COVID-19 darkened the nearby Broadway theater lights and made the emptiness of the tourist destination and entertainment center known as the “Crossroads of the World” eerily palpable, Times Square has looked to reassert itself and show renewed signs of life, proving naysayers wrong and giving hope for New York City’s eventual economic rebound.

Daily pedestrian counts for the weekend of April 2 to April 4 reached 150,000, with the number rising April 3 to over 160,000, according to the Times Square Alliance, a business-promoting group. While those numbers are less than half of the 360,000 visitors a day Times Square saw pre-pandemic, the first weekend in April’s daily average was up five times from 30,000 during the same weekend a year earlier and marked the highest weekend daily average of the year so far, the nonprofit group said.

When it comes to Times Square, “many people were looking to write the obituary, and [now] hope they have an eraser,” Times Square Alliance acting President Tom Harris said in an interview. “Times Square is going to flow forward from the pandemic.”

The recovery of Times Square is key to the economic health of the city. Times Square, representing 0.1% of New York’s total area, represents 15% of its economic output, Harris said.

NYC & Co. on Wednesday unveiled a $30 million campaign for “tourism recovery,” the largest of its kind to date. The city’s tourism marketing arm forecasts the number of visitors to rise to 36.4 million this year from 22.3 million last year. By 2024, it expects the visitor count to recover to 69.3 million, beating the city’s 2019 record of 66.6 million.

Of course, challenges abound. Many stores are still empty, the city itself is still struggling and there's no guarantee the signs that vaccinations are curbing the pandemic's effects won't take an unexpected turn.

Even so, Harris is looking at the year-over-year improvement. Harris, who has been with the alliance since 2008, has seen many of Times Square’s good and bad days. With the habit of walking the area and getting a pulse of what’s going on, he witnessed pedestrian traffic drop 90% in March 2020 before slowly increasing between April and September and recovering to about a 100,000 daily average from September through March of this year.

The combination of warmer weather, more people getting vaccine shots and eased travel restrictions led to the recent new jumps in traffic, Harris said. In a sign activity will further pick up, he said visitors for now are still mostly New Yorkers “reconnecting with the city” or those from New Jersey or Connecticut coming in for the weekend.

The planned September reopening of Broadway shows may also bring in more tourists, who make up the majority of audiences.

Another positive signal: Times Square’s hotel occupancy rate increased to 51%, with more than half of opened hotel rooms being occupied, Harris said.

“That’s a number we are optimistic about,” he told CoStar News. “There’s a lot of pent-up desire to travel.”

Reservations illustrated that desire about two blocks south of Times Square at the new Margaritaville Resort that’s expected to open in June.

“We are seeing a ton of excitement and interest” in the hotel, general manager Kori Yoran said in an email to CoStar. “The demand is absolutely there. … The initial interest has us very optimistic about the future.”

The hotel already has reservations on the books through the summer and fall, and even for New Year’s Eve, Yoran said.

Among 47 hotels in Times Square, 26 have reopened, and 75% of the area’s retail businesses are also open, Harris said. Some 51% of the 309 food and beverage establishments are open. Nine of them, including fast-food shops Taco Bell, Chick-fil-A and Krispy Kreme, and Prime Catch, a steak and seafood restaurant, were opened in the past year.

On the office front, Rudin Management recently announced a major makeover project for 3 Times Square, also known as the Thomson Reuters Building, in a move it said showcases its “clear commitment to the future" of New York.

Improved prospects aside, it remains to be seen whether Times Square, and the city at large will see a complete comeback. As much as stores including Forever 21, Disney, H&M and Levi’s are open for business in Times Square, some of those that have closed marked a glaring contrast. For instance, the shuttered Gap and Old Navy flagships in the middle of Times Square were mostly emptied with only bare mannequins inside greeting the hustle and bustle now slowly gaining momentum.

The vacancy rate in the Times Square retail market has jumped to 5.6%, above the city’s average of 4.5%, while the net change in occupancy has declined compared to an increase pre-pandemic, according to CoStar data.

On the office front, the remote-working trend that has battered New York, the largest U.S. commercial real estate market, is also hurting Times Square. Occupancy totals over the past 12 months are still negative as the vacancy rate has set all-time highs, a separate CoStar report said, adding rents were still declining at the start of the second quarter.

Meanwhile, reports of increased crime in Times Square and the rest of the city, along with other quality-of-life issues, create other potential hurdles to the comeback of tourists, businesses and office workers. Billionaire investor Barry Sternlicht recently said concerns about safety, quality of life and tax hikes will put a damper on New York’s office market.

But Harris isn’t fazed.

“Tenants always come and go,” he said, adding TikTok, for instance, has signed a new office lease in the neighborhood in the past year. “Others will be coming to us. We are seeing a new uptick in demand. Times Square is the center of New York. We have a deliberate strategy to bring Times Square back.”