Vornado Buys McDonald’s, Air Rights for Penn District Tower

Vornado Realty Trust is supersizing its Penn District development ambitions, snapping up a Midtown McDonald’s and nearby air rights in deals that could add tens of thousands of buildable square feet to a planned residential tower.

The developer paid $12 million for a one-story McDonald’s outpost at 490 Eighth Avenue, according to city records reported by Crain’s. The purchase gives Vornado control of a 47-foot-wide parcel abutting its long-in-the-works assemblage on West 34th Street, steps from Penn Station and Madison Square Garden.

The McDonald’s deal comes with a twist: the fast-food chain isn’t going anywhere. Filings tied to the sale indicate the restaurant will remain as a tenant and secure a retail spot in whatever Vornado ultimately builds.

Vornado also bulked up the project by acquiring roughly 66,000 square feet of air rights from neighboring properties. The firm paid $4.4 million for 31,000 square feet above 260 West 35th Street and $4.8 million for another 34,200 square feet from 254 West 35th Street, according to broker Albert Sultan of KSR, who handled both transactions.

Records show the Haddad family was behind the sale at 260 West 35th Street, and the Cayre family was behind 254 West 35th Street.

The acquisitions are the latest moves in a yearslong land grab that now spans nine contiguous lots. Vornado has been quietly stitching together the site since 2015, though most of the buying activity ramped up last year. The assemblage once housed low-rise retail, including a TGI Friday’s and a pawn shop, but is now largely cleared.

What all of this means for the project is still unclear. In September, the real estate investment trust told investors it planned to spend $350 million on a 475-unit apartment tower at the site (plans filed this week included an additional six units). The newly acquired parcels and development rights could allow for a taller or denser building, potentially up to 325 feet or more, with additional bonuses tied to affordable housing.

A spokesperson for Vornado declined to comment.

The Penn District has become a key focus as the company repositions around mixed-use and residential plays tied to the transit hub’s long-term overhaul.

— Holden Walter-Warner