Around Penn. Station
The area around New York’s Pennsylvania Station has long remained gritty and clogged with commuters as much of the rest of Manhattan has flourished.
Now Vornado Realty Trust is gearing up to change that.
One of the nation’s largest office landlords, Vornado is hoping to spark a revitalization of the area, where it is by far the dominant landowner, by investing hundreds of millions of dollars in new retail space, public plazas and other infrastructure, according to real-estate executives briefed on the plans.
The aim is to improve the desirability of the area’s office buildings, which are now deemed to be in a second-rate location and thus draw second-tier rent. If successful, it could mean dramatic growth in property value for Vornado. The company owns about nine million square feet in the neighborhood, including the 57-story 1 Penn Plaza, a portfolio with an estimated value of about $5.5 billion, according to Green Street Advisors.
“There is no reason that we cannot achieve very, very substantial rising rents in Penn Plaza—very substantial, enormous—with a little TLC,” Vornado Chief Executive Steven Roth said at a Citigroup Inc. investor conference last month, according to a transcript. “That’s going to be the principal focus of Vornado in the next short period of time, [the] next couple of years.”
.....Mr. Roth appears to be highly focused on the Penn Station area, where he gradually built up his holdings throughout the 2000s. He recently hired Marc Ricks, a former economic-development official who worked in the administration of New York City Mayor Michael Bloomberg, in part to work on the Penn Plaza plan. And the company contacted numerous architects last year for ideas about how to remake the area, and has showed some renderings to potential tenants.
Planning is still in early stages and specifics have yet to be decided. But the more-prominent ideas Vornado has shared with others include tearing down the retail space, and adding new retail, on the block of 1 Penn Plaza, a block north of Penn Station that currently holds a Duane Reade pharmacy and a Kmart, the executives briefed on the plans said.
The company also is hoping to make other moves meant to alleviate the congestion from commuters and tourists who clog sidewalks around Penn Station, the city’s busiest train station. For instance, Vornado hopes to shut down half of the street just north of the station, 33rd Street, and it is pondering remaking some entrances to Penn Station.
These ideas, which likely would need city or state approvals, appear to come on top of investments Vornado long has been planning related to a proposed expansion of Penn Station into the Farley Post Office. Vornado and the Related Cos. in 2005 were designated the developers of part of the post office and a mixed-use tower known as Moynihan Station.
Various proposals have come and gone for the post office, with little progress, though Vornado and Related have kept their status as the designated developers. Now, the state continues to work on a plan. Work has begun on a first phase of the project, $300 million in largely infrastructure work necessary for future expansion