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Vornado Touts Event Platform to Fill Office Tower Site Facing Penn Station

A year ago, Vornado Realty Trust CEO Steven Roth slammed the brakes on New York's ambitious plan to redevelop Penn Station by building up to 10 office towers encompassing 18M SF on property mainly owned by Vornado in an expanded Penn District.

In an earnings call last January, the Vornado CEO said it was "impossible" to start building new office towers in Midtown Manhattan for the foreseeable future with frozen capital markets.

In an earnings call last week, Roth made it clear he hasn't changed his mind. "Now we have a CBD office apocalypse involving the work from home threat and the total blacklisting of office in the capital markets," Roth said, during the call. "You can't build anything in these frozen capital markets."

Vornado last week unveiled its pitch for a "temporary" adaptation of the former site, across the street from Penn Station, of the Pennsylvania Hotel, a century-old relic on Seventh Avenue that was demolished last year to make way for what the REIT originally planned to be a 61-story office tower to be known as PENN15.

Tennis, anyone?

One of the new renderings for an 80K SF event space to be known as the PENN Platform features a series of tennis courts the developer suggested could be used to stage some U.S. Open matches across the street from Penn Station and Madison Square Garden.

An online promotional brochure said the platform could be configured for basketball courts or with runways that could feature models during New York Fashion Week. The site also may be used to set up a gigantic billboard that would be 150 feet tall and 197 feet wide.

We're just guessing here, but perhaps the first message on the new mega-billboard will say "WATCH THIS SPACE." A Vornado spokesperson said the renderings in the presentation were for "conceptual purposes" and that the REIT is considering a number of "potential interim options for the Hotel Pennsylvania site," Bloomberg reported.

The brochure said the cleared site now offers "a diverse range of scenarios for brand activation and events" that could include "basketball activation with NCAA-sized courts, a tennis brand, a large covered tent setup or an outdoor concert venue."

Last June, declaring that NYC can no longer tolerate any delay in upgrading a "congested, unpleasant" Penn Station—the denizens of the Big Apple usually call the train station, which sits under Madison Square Garden, a rat warren—Gov. Kathy Hochul officially "decoupled" the train station redo from Vornado's delayed office towers.

Hochul said the state will no longer wait for Vornado lift its pause on the 18M SF in new office and commercial space that was supposed to contribute at least half of the funding for the long-awaited upgrade of NYC's busiest rail transit hub.

Instead, Hochul announced that the state will turn to alternative funding—including grants from the federal and state governments—for rebuilding Penn Station, a project that Empire State Development, the state's economic development agency, has estimated will cost up to $20B.

"This has been a project that has had a few setbacks," Hochul said, at a news conference. "We are no longer tolerating the delay. crowded, congested. It's unpleasant. We are decoupling this from the prior . It doesn't mean we aren't going to build office space at some point. While demand for office space is down right now, we believe this will be temporary."
Reprinted with permission from the Fri, 16 Feb 2024 04:06:06 EST online edition of GlobeSt © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.