The sagging market for office space has opened a window of delay that is energizing opponents of Governor Kathy Hochul’s plan to redevelop the Penn Station neighborhood by building ten supertall towers filled mostly with offices.
The neighborhoods largest property owner, Vornado Realty Trust, underlined the point by telling stock analysts that any new construction would likely be delayed two to three years because of high interest rates and weak demand for office space. Museum And Exhibition Rendering
Vornado has been saying for months that they were in no rush on the project that Governor Hochul has been pushing with urgency. But this was the developers strongest statement yet that now was not the time. New construction, said Vornado’s CEO, Steven Roth, was “almost impossible.”
“I would say it confirms the window of delay,” said Samuel Turvey, whose group, ReThinkPennStationNYC, is a leading proponent of a different approach to the future of both Penn station and the neighborhood.
“The good news is that this gives the Governor and Mayor time to evaluate bona fide plans for addressing the calamity at Penn Station. The Vornado-centric Penn Station plan should be permanently retired in favor of a public spirited and equitable option.”
Turvey’s group is one of several that have offered plans that depart in a very significant way from Governor’s Hochuls proposal, which would siphon revenue from the new towers to pay for a portion of the cost of renovating Penn Station while Madison Square Garden remains on top of it.
Turvey and others call for moving Madison Square Garden, whose permit at its current location expires in July. The delay in starting construction on any of the Hochul proposed towers means the decision on MSG moves to the front of the redevelopment debate.
James Dolan, the CEO of MSG, recently said he wants the Garden to stay put and that the permit to operate above Penn Station should be extended “in perpetuity.” That decision is in the hands of the Mayor and the City Council.
“Vornado’s failure to build proves that the existing plan is backwards,” said another critic of the plan, Alexandros Washburn, the city’s former chief of urban design. “Buildings can’t transform the station, but a great station–Grand Penn–can transform the buildings. Look how the High Line transformed its neighborhood. The buildings followed the improvement.”
As the largest property owner in the neighborhood, Vornado stands to benefit either way, whether it builds now or, as it now says, waits to see if conditions improve. Vornado did not actually abandon the project, critics noted, and recently joined a lawsuit on the side of supporters of the project.
“So they are only sidelining themselves for the time being,” said Turvey, whose group is pressing the lawsuit to block Hochul’s plan. “Their actions are mostly accenting the obvious as to the present state of the commercial real estate market.”
Indeed, in laying out the delay on a call with stock analysts, Vornado’s Roth noted that five day a week office use was never coming back. “I think you can assume that Friday is dead forever. Monday is touch and go.”
Development around transit hubs is popular. But since the pandemic there has been a shift in thinking about the best kind of development.
In fact, a task force created by Mayor Adams and Governor Hochul recently recommended that development in midtown Manhattan focus on creating mixed use neighborhoods, where people lived, worked and played, rather than just the traditional focus on office buildings that left neighborhoods dark and underused at night.
The task force did not directly address the Penn Station plan. Vornado stressed that they still support the plan and Governor Hochul’s team said they were sticking with it.
“Quarterly conditions may fluctuate,” said a statement from the state agency supervising the project, the Empire State Development Corporation, which seemed to avoid the point made by Roth that a secular change in office use is underway.
“But Governor Hochul’s commitment to revitalizing Penn Station and the area surrounding it will not.”
Bird-Eye View Renders Community Board Five, whose jurisdiction covers Penn Station and the neighborhood, has announced plans to conduct a new planning process to replace Hochul’s plan, an undertaking that now appears to have breathing space because of Vornado’s delay.