7.31.23 - Left for dead, Vornado plan for Penn Station towers may still have life
' Late last month, Gov. Kathy Hochul said the state is no longer tying its plans to rebuild Penn Station to a plan by Vornado Realty Trust to develop towers around it. But that may not mean the ambitious project is dead.
An attorney for the Hochul administration told a state judge last week it’s “completely untrue” that the plan to build towers around the station is kaput.
“The project has not been abandoned. Nothing has changed,” the attorney, Philip Karmel, told Judge Lucy Billings at a hearing last Wednesday in New York State Supreme Court, according to notes taken by Layla Law-Gisiko, chair of the land use committee for Community Board 5.
A second attorney at the hearing confirmed the remarks, which Karmel made when arguing against a lawsuit filed by the Penn Community Defense Fund, the City Club of New York and others. The plaintiffs accuse Empire State Development, the state’s economic development arm, of being unduly influenced by Vornado when assembling its reconstruction plan, which envisions paying for a new Penn Station by harvesting the tax revenue produced from 10 new supertall towers in the neighborhood.
Vornado said last year the Penn project is stalled, and in light of that characterization, Hochul said last month she was “decoupling” new development from the more urgent goal of rebuilding the underground station, which serves about 600,000 commuters per day. Hochul said she would “entertain all concepts,” including an offer from private equity firm ASTM to pay for the estimated $7 billion reconstruction project in exchange for managing Penn Station for 50 years.
Although the governor seems to have moved on, her words don’t necessarily mean the state’s project with Vornado is dead, Karmel said in a July 21 court filing.
“Even if it were the case that the governor had announced major changes to the project,” the document reads, “such an announcement would not provide a basis to vacate” the project.
Richard Emery, an attorney for the plaintiffs, said the state’s legal argument overlooks the fact that the office market is quite different than only a few years ago.
“I don’t see how the state can argue nothing has changed when clearly everything has changed,” he said.
A spokeswoman for Empire State Development didn’t respond to a request for comment.
Vornado officials are expected to offer their thoughts on the matter Tuesday, when Chief Executive Steven Roth holds his regular quarterly earnings call with Wall Street analysts.
In addition to the Penn Station project, a key question for Vornado is whether occupancy rates continue to fall in its office buildings. SL Green Realty, the city’s largest commercial landlord, reported continued declines in occupancy for the second quarter. But the Empire State Building’s owner said occupancy and leasing rates edged up last quarter. The landlord’s older Midtown office spaces are generally cheaper to rent than SL Green or Vornado properties. '
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