Yup, I've seen em alright... I always thought this was a known thing but I guess it's a bit more obscure than I thought. I'll put "kids" in quotation marks because most of them look to be about my age (20) or at least above 18, so I think the majority are legal adults or close to it.
Recently the square (in the center area between the buildings) has basically been blocked off by blue barriers and cleaned up, so the "kids" hang outside of it now, but they used to all be in the square, many of them had cardboard and such stuff to sit on and hang out with each other while drinking and smoking, and unfortunately even doing drugs. Most recently, near Seibu-Shinjuku Station I accidentally sat right on top of some drug tablets still encased in their packaging, not sure if that was specifically from them though. Also saw what looked like a drug dealing between some kids in front of the welcia nearby. I saw one guy playing guitar in a little circle of friends which seemed nice and wholesome despite the circumstances. Some of them aren't nice, there was a cleanup operation last year where there were trash cans for different trash types in the square so anyone could freely pick up trash and throw things away, but as I was partaking in that myself, one of the "kids" knocked over a bunch of glass liquor bottles I was trying to collect and throw away, shattering them all over the ground.
I was going to show images of where they hang now, but it's quite difficult to find images of the correct streets because google street view is too outdated on a constantly developing area. But I'll show street view images from 2022 of what looks like some of them, as well as the trash. Note that this group in particular might've been elderly (and I did indeed see elderly homeless sleeping in the square too, but I don't see them on the streets as of last month).
Might be unbelievable to hear me say this, but the trash situation gets far worse than this at night...
As of last month, since the square was closed off and cleaned, the trash has just relocated and now it litters the streets every night, with plenty of cans, bottles, wrappers, bags, anything you can think of on the streets, for which unfortunately there are no trash cans to accommodate anymore.
Slightly off-topic,
under this bridge there are homeless people who sleep every night here, and last month I discovered what appeared to be a young girl that escaped abuse (or got kicked out?) from her family as well. She, like most of the others near those poles, had cardboard as a little shelter she was enclosed in, while maybe playing games on her phone or something. There was a sign on her little home explaining her situation, that she really was indeed homeless, but I didn't want to seem strange or anything for standing there too long to read carefully, especially considering I have trouble reading the less unique kanji when handwritten...
At any rate, I think she counts on a technicality as one of those "kids" as well, but just doesn't hang out with them for whatever reason (can't blame her with the things they end up doing...)
But yup, I've seen them.