[J. Will]

The 'malling' of Manhattan

http://therealdeal.com/newyork/artic...g-of-manhattan

Farley Post Office/Moynihan Station

Another potentially enormous project, the expansion of Pennsylvania Station into the Farley Post Office building just to the west, would add as much as 750,000 square feet of retail in the Beaux Arts building.

The project, to be named in honor of late U.S. Senator Daniel Patrick Moynihan, would create a new retail destination to bookend vibrant West 34th Street. However, it's by no means certain. Vornado and Related, which partnered to strike a deal with the state in 2006 to develop the retail, face a year-end deadline to solidify the financial terms.

Furthermore, three avenues to the east are two malls that provide cautionary tales to retailers. The Manhattan Mall and the Herald Center, both within spitting distance of Macy's on Sixth Avenue at 34th Street, were reimagined in the 1980s, but failed and were recreated in scaled-down forms again in subsequent years.

Yet in the project's favor is the massive amount of commuter foot traffic in the area. In 2010, Penn Station was the busiest transportation facility in the country, with 600,000 passengers daily.

The first phase of the project broke ground last fall and focuses on the transportation infrastructure. The retail post office will remain in place on the Eighth Avenue side of the building, with new entrances for commuters to ease congestion into Penn Station.

The retail development -- which Vornado and Related are doing with the property owner, Empire State Development Corporation, and in consultation with the Port Authority -- is part of the project's second phase, which could include a hotel or other amenities. That has not yet started.

One set of plans from the state's Moynihan Station Development Corporation shows a possible street-level layout with seven spaces comprising more than 106,000 square feet of retail, including blocks of "destination retail" on the Ninth Avenue side of the building. It also shows blocks of up to 50,000 square feet on other levels in the six-story building.

"That is a great building," Grayson said, referring to the 1912 McKim, Mead & White icon.

"It starts with heritage. If you put [in] the right kind of tenant, it can be really exciting," he said, pointing to examples in historic buildings such as Chelsea Market.