Vornado to combine Penn Plaza buildings into 4.2M sf megacomplex

REIT has big plans for One and Two Penn Plaza as part of area revamp

TRD New York /
Feb.February 17, 2016 10:31 AM

UPDATED, Feb. 17, 11:32 a.m.: As part of its mission to Revamp Its Penn Plaza portfolio, Vornado Realty Trust plans to combine its One and Two Penn Plaza office buildings into a 4-million-plus square foot complex.

“The goal here is to achieve market rents as much as 50 percent higher as market rents,” CEO Steven Roth TRData LogoTINY said on the company’s earnings call Wednesday morning.

Vornado owns some 9 million square feet of office and retail properties surrounding Penn Station, and as the city’s office market has shifted west with projects like Hudson Yards and Manhattan West, the mega REIT sees a high-payoff opportunity in investing in the area.

Roth said the company is “knee deep” in planning multiple projects in the area, including combining One and Two Penn Plaza into a 4.2 million-square-foot complex.

Roth said combining the buildings would give the landlord more leeway to move tenants around, and add amenities like new food outlets.

“We can afford to put an amenity complex into those 4-plus-million-square-feet buildings that are not economic even in a half-a million or a million” square foot building, Roth said. As the company looks to attract TAMI tenants, he added, Vornado is looking to replicate much of what the “tech industry is doing on their big, huge campuses.”

The Two Buildings Are Separated By 33rd Street, a portion of which the city’s Department of Transportation shut down over the summer as a test-run For A Public Plaza.

The 1.6 million-square-foot Two Penn Plaza, located above Penn Station, is leased to McGraw-Hill and the Dolan family’s Madison Square Garden Company. Roth said the plan is to “re-skin” the building, replacing the punched windows with ones that will stretch nearly from floor to ceiling, making the building “look like it was built recently.”

The CEO said plans for  the 2.7-million-square-foot One Penn Plaza would resemble a more conventional upgrade. He said it was premature to put a price on the renovations.

Market rents in the area average $55 per square foot, and Vornado has reportedly completed deals at $60 per square foot recently.

The company is spending hundreds of millions of dollars to Upgrade Buildings Like 7 West 34th Street and 330 West 34th Street, and has hinted at more to come as projects such as Governor Andrew Cuomo’s goal to jumpstart a new Penn Station hit the pipeline.

Related Articles

Vornado's Steve Roth and 220 Central Park South (Credit: Getty Images, iStock)

Free and clear: Vornado pays off debt at 220 CPS

Vornado chairman and CEO Steven Roth, and 608 Fifth Avenue (Credit: Getty Images)

“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call

Steven Roth, CEO of Vornado and 640 Fifth Avenue (Credit: Getty Images and Vornado Realty Trust)

Bank of China issues $500M to Vornado in refi of 640 Fifth Avenue

Facebook CEO Mark Zuckerberg and Apple CEO Tim Cook with a rendering of the Farley development (Credit: Getty Images, SOM iStock)

Facebook facing off with Apple over space in Vornado’s Farley Building conversion

220 Central Park South and Michael Cantanucci (Credit: Getty Images and Google Maps)

Car dealer drops $38M for condo at 220 CPS

Facebook CEO Mark Zuckerberg and a rendering of the Farley Post Office building redevelopment (Credit: Getty Images, SOM)

Facebook in talks for massive lease at Vornado’s Farley Building

Vornado president Michael Franco and 512 West 22nd Street (Credit: VNO)

WarnerMedia to anchor Vornado’s West Chelsea spec office

From left: 220 Park Avenue South, 15 Central Park West, 520 Park Avenue, 35 Hudson Yards, Sting, Juan Beckmann Vidal, Daniel Och, Bob Diamond, and Stephen Ross (Credit: Getty Images, Wikipedia, StreeEasy, and Google Maps)

Serial buyers trade “old” condos for new on Billionaires’ Row