Making sense of Italian firm’s Penn Station play
Why ASTM would pay $1B to replace MSG theater with giant skylight
An Italian firm generating buzz for its Penn Station plan aims to buy the theater attached to Madison Square Garden and replace it with nothing.
Well, nothing that makes money, at least: a glass entrance to Penn Station.
A subsidiary of ASTM Group is in talks to buy the former Felt Forum — subsequently named and unnamed the Hulu Theater — and a service road for $1 billion, Crain’s reported. The deal with MSG Entertainment would only make sense for ASTM if paired with a revenue-generating agreement to operate Penn Station, which involves three layers of government and several transportation agencies.
According to the publication, ASTM would build an Eighth Avenue entrance to the station and place a rectangular glass base around MSG to allow more natural light into the infamously dungeon-like transit hub. Versions of the plan have been kicking around for years, championed by various players including Vishaan Chakrabarti, who is working with ASTM on the latest one, as is former Metropolitan Transportation Authority and Port Authority chief Patrick Foye.
The Italian company is reportedly spreading word that a deal with theater owner MSG is in place, although the prospective seller would not confirm that. Nothing figures to happen without ASTM also coming to terms with the Hochul administration, the Adams administration, the MTA, Amtrak, NJ Transit and probably the Biden administration, too. Amtrak owns Penn Station.
For a firm to appear out of the blue and pull off such a coup would be unprecedented in New York politics, but stranger things have happened. The possibility, however remote, opened up because the state’s plan sank with the market for office development, on which it was based.
Metropolitan Transportation Authority CEO Janno Lieber was initially dismissive of buying the theater and building an entrance, which he estimated would cost $2 billion.
But Lieber, the featured speaker at a Crain’s breakfast this week, did praise ASTM — which had bought a front-row table — for keeping Penn Station on the front burner, which could give the state an alternative to authorizing the development of 10 towers around the station and steering tax revenue from them to the transit hub.
Vornado Realty Trust, the dominant land owner in the district and prospective developer of eight of the towers, recently threw cold water on the plan by saying the market for ground-up development is frozen. Key members of the state legislature, which would have to approve the tower plan, lost faith in it. Gov. Kathy Hochul then said she would explore alternatives.
ASTM has yet to reveal how much it would cost to renovate the station and how it would finance the redevelopment. The firm has said it would be cheaper than the existing $7 billion to $10 billion plan with Vornado, but has not offered details.
It’s also not clear how much ASTM would demand in revenue from the station, which the Italian firm proposes to manage for 50 years.
The nonprofit Municipal Art Society, for what it’s worth, published an op-ed in the New York Daily News saying the ASTM plan “needs to be taken seriously.” The group had been adamant about the need to move Madison Square Garden itself for a Penn Station rebuild, but backtracked upon ASTM’s entrance into the discussion.
— Holden Walter-Warner and Erik Engquist