8.29.22 - Penn Station Plan Makes a High-Stakes Bet on the Future of Office Work
' In a bid to reshape Midtown Manhattan, Gov. Kathy Hochul and New York State officials are pushing ahead with one of the largest real estate development projects in American history: 10 towers of mostly offices around Penn Station, the busiest transit center in the country.
The buildings would help pay for the renovation of the dreary underground station, the reason officials have said they are seeking the additions to the skyline. But the plan is moving forward amid severe uncertainty gripping the office market: Many companies are trying to reduce their real estate footprint as workers continue to clock in from home.
A clue to whether the project succeeds may lie two blocks to the west, in the Hudson Yards neighborhood. Development there has not met expectations three years after a slate of new construction — including office towers, retail and residences — opened with grand ambitions. Major office tenants there are downsizing amid the stubborn popularity of remote work, and a quarter of the ultraluxury condos remain unsold.
Ms. Hochul has argued for the state’s powerful role in the project, in which it has overstepped New York City’s zoning rules to allow the developers of the sites — most of which are owned by one company, Vornado Realty Trust — to build taller and larger than they otherwise could have. Mayor Eric Adams announced his support for the project after the state clarified that the city would not lose property tax revenue on it. It won’t gain much, either.
Boosters of the Penn Station plan often frame the fixes at the station, which are estimated to cost $7 billion and be completed by 2027, as the project’s centerpiece. The plan would add taller ceilings and new entrances to the station but no additional tracks or platforms. But the plan’s most significant impact would be the new buildings, which are expected to take two decades to complete and require the demolition of numerous properties on several blocks, including a 150-year-old Roman Catholic church.
For its supporters, the Penn Station project is an emphatic endorsement of New York City’s future and an overdue jolt to a drab area of Manhattan. They say that the universally disliked station desperately needs to be revamped and that it makes sense to build towers around it.
“We need a Penn Station that has more capacity, that’s more unified and that is safer and able to serve the region like Grand Central,” said Brian Fritsch, the communications director at Regional Plan Association, a research and advocacy group. '
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