From left: Vornado Chairman Steven Roth, a rendering of the 15 Penn Plaza skyscraper and Hotel PennsylvaniaVornado Realty Trust has put off constructing a massive skyscraper that would challenge the Empire State Building’s height at 15 Penn Plaza, sources told the New York Post, and might even pour millions into renovating the hotel that currently occupies the site.

With market rents still hovering below the rates necessary to make office development profitable and the financial firms that would make sensible anchors cutting operations instead of expanding, Vornado has decided to hold off on the development. [more]

While for the first time since 2000 Manhattan will see an entire year go by without the opening of a significant new office tower, the borough is gearing up for a surge in new office construction mid-decade, according to recent analysis by the New York Building Congress, released yesterday.

Manhattan added about 20 million square feet of new office space between 2001 and 2010, a modest offering by historical standards. Nearly 4 million square feet of new office space was created annually in the 1970s and 1980s.

“It is remarkable how little office space was actually added in Manhattan during the recent building boom,” said Richard Anderson, president of the Building Congress. — Katherine Clarke [more]

Vornado Realty Trust bought out its partners, the California Public Employees Retirement System, Magic Johnson and MacFarlane Partners at the stalled Harlem development site at 1800 Park Avenue near 124th Street, the New York Post reported. Vornado has not made public its plans for the site, but the Post said it renewed building permits for a 23-story garage, retail and office property. The firm had tried to develop 1800 Park in 2007 but couldn’t get enough commitments from anchor tenants. Meanwhile, in his annual letter to investors, Chairman Steven Roth said developer Mel Blum is rejoining the firm and that Vornado intends to pursue projects at 15 Penn Plaza and 220 Central Park South, currently owned by Extell Development. [Post]

From left: Stephen Ross and Steve Roth

No one heeded his advice last year, but Steve Roth still wants the city
to upzone Park Avenue.
The Vornado Realty Trust chairman, who traded lighthearted jabs
at the Real Estate Board of New York’s quarterly luncheon this
afternoon with his decidedly more staid development rival, Related
Companies boss Stephen Ross, paused mid-sentence, momentarily
holding his tongue so as not to offend what was likely a room full of
Park Avenue landlords, brokers and investors.
“Oh, I don’t give a shit,” he ultimately decided, to roars of laughter.
Most Park Avenue office buildings are currently “hanging on by
their fingernails to being technologically obsolete,” Roth continued,
proposing that the city council rezone the thoroughfare so that older,
existing buildings could be torn down and replaced with larger, newer
ones. [more]

For New York City real estate, 2010 in many ways marked a return to normalcy after the tumultuous aftermath of the financial crisis. As the ubiquitous real estate appraiser and Miller Samuel CEO Jonathan Miller put it: “it was a year of a sense of relief.” City home prices stopped their freefall and sales activity improved considerably from the post-Lehman doldrums. Stalled condominium projects like the Sheffield and 1 Rector Park re-started sales. Mexican billionaire Carlos Slim bought Tamir Sapir’s Fifth Avenue townhouse, the Duke Semans mansion, for $44 million. As the unspoken taboo on ostentatious spending faded, a number of high-end residential properties changed hands at the end of the year, including Brooke Astor’s 14-room duplex at 778 Park Avenue, which finally sold after two years on the market (albeit for a significant discount from its original asking price). Japanese retailer Uniqlo snagged 89,000 square feet at 666 Fifth Avenue’s former Brooks Brothers space for a record $300 million, demonstrating that retail is still thriving along the posh shopping corridor.
But the economic downturn continued to make its presence felt. The office market remained uneven and troubled lender iStar Financial fought to stave off bankruptcy amid lingering fears of a double-dip recession.
Here are The Real Deal staff’s picks for the stories that most altered the New York City real estate landscape in 2010, in alphabetical order. [more]

Separating the aesthetics from the ethics of the giant skyscrapers coming to Manhattan

From left: 15 Penn Plaza and One World Trade Center

From the October issue: As you may recall, several years ago, in the aftermath of 9/11, skyscrapers were thought to be a thing of the past. Developers, reflecting the mood of the people at large, were confident that no one would ever wish to rent floor space on one of the upper stories of a truly tall building. In the heated debate surrounding what should be built at ground zero, solicitous souls implored architects to design far lower buildings — 45 stories at the most — lest we seem to provoke the ire of terrorists, or tempt fate through our architectonic hubris. That was then. Now, developers are once again vying to see who can raise the loftiest towers in the greatest hurry. Even at ground zero, One World Trade, formerly known as the Freedom Tower and initially conceived by Daniel Libeskind, is already rising. Libeskind’s design has been fundamentally reworked by the far more conventional firm of Skidmore Owings & Merrill, which betrayed the deconstructivist style for which Libeskind is known by reasserting (probably for the better) the sort of staid symmetry for which SOM is known.

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Turns out Empire State Building owners Anthony and Peter Malkin aren’t the only ones who have a problem with Vornado Realty Trust’s planned 15 Penn Plaza — FM radio broadcasters say that the 67-story tower could interfere with radio transmissions. The $3 billion project, which is slated to reach 1,216 feet into the sky, could obstruct radio signals emitted from the Empire State Building, which is located near its planned site on the corner of 33rd Street and Seventh Avenue, according to Radio World. The Empire State Building is home to 19 different radio stations, many of which began operating there after the Sept. 11 attacks. Vornado has, thus far, not expressed any intent to add broadcast facilities to its planned tower, compounding some radio broadcasters’ fears. [Radio World]

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From left: Elida Jacobsen Justo, director of sales; Robert Siegel and Gregory Karn of Gwathmey Siegel; the rounded corner exterior of the Setai, at Fifth Avenue and 36th Street; and the view of New York City from the 59th-floor windows

The Setai Fifth Avenue, a new hotel and condominium project at 400 Fifth Avenue, is nearing completion, developers announced today during an advance press-only tour of the building. The 214-room hotel, developed by Bizzi & Partners, will open Nov. 1, with the 184-uni [more]

From the September issue: The grim national housing statistics delivered last month, which renewed fears of a second sharp decline in the overall economy, were not reflected in the Manhattan commercial leasing market — which continued to improve modestly overall. “We are not seeing any double dip in office leasing,” said Jeffrey Peck, senior managing director at commercial advisory firm Studley. However, he noted, “we are also not seeing any tremendous strength.” Last month, brokers said tenants continued to actively poke around for new space. The blockbuster example in Midtown was a clothing supply firm reportedly looking to lease 500,000 square feet in the Empire State Building. A pending deal could not come at a better time for the iconic tower, which was dealt a blow last month when the City Council approved plans for Vornado Realty Trust to build a nearby skyscraper. The owner of the Empire State Building, Anthony Malkin, was aggressively arguing that the proposed tower, 15 Penn Plaza, will block the views from his building.

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City Council Speaker Christine Quinn has received thousands of dollars in campaign contributions from Vornado Realty Trust through a loophole in campaign finance regulations, despite publicly praising a three-year-old law that was supposed to limit the amount that individuals doing business with the city are allowed to contribute, to $400 each. According to Crain’s, Quinn received $19,900 from Vornado executives, nearly $15,000 of which is being held in an account saved for her expected 2013 mayoral campaign. The donations began coming in around the same time the city began building a database of companies doing business with the city as part of the new campaign finance law, which passed in 2007. Last week, the City Council approved Vornado’s proposed skyscraper at 15 Penn Plaza with Quinn’s support, despite resistance from Community Board 5. Since the Vornado project is listed under 401 Hotel Reit LLC, Vornado and its executives aren’t considered to be “doing business with the city” themselves — only the LLC is — making it easy for them to skirt the $400 limit. Earlier this week, Quinn said she supported efforts to close that loophole by adding new disclosure requirements for companies with ownership interests in LLCs. Still, she doesn’t plan to return Vornado’s donations. [Crain's] 

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