Regarding 15 Penn:
http://rew-online.com/2016/09/16/vor...to-apartments/
Vornado: Hotel Penn office conversion unlikely, tower may be turned into apartments
BY CHRISTIAN BRAZIL BAUTISTA
SEPTEMBER 16, 2016
Quote:
Vornado CEO Steven Roth has ruled out converting Hotel Pennsylvania into a supertall office tower, instead floating the possibility that the hotel may be turned into an apartment building.
In a conference call during the 2016 Bank of America Merrill Lynch Global Real Estate Brokers Conference, Roth expressed skepticism over a possible office conversion, saying that the site cannot compete with other Manhattan office complexes such as Hudson Yards and the World Trade Center.
“The problem is we cannot deliver the site economically in competition with what Hudson Yards is doing and the World Trade Center is doing. And we’re not off by a little, we’re off by a lot for lots of different reasons,” he said.
“So I wouldn’t predict that a large office tower is in our future for Hotel Penn. I mean I can’t tell you how much we hate having to build a building where we have to get $150 rents or something like that, which are not in the market. It’s just not something that we do.”
While Roth has narrowed down the possibilities, it is still uncertain whether the property will be turned into apartments or will continue operating as a hotel. “The options for Hotel Penn are, leave it where it is, knock it down. If we knock it down, it’s going to be apartments and retail. If we leave it the way it is, it’s going to be a hotel,” Roth said.
Hotel Pennsylvania, which sits near Madison Square Garden and the Empire State Building, has been awaiting renovations since 2013. Vornado originally planned to raze the building to give way to a 1,216-foot tower called 15 Penn Plaza. However, plans were shelved when Merrill Lynch decided not to take space in the building in 2007.
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I call this a bunch of BS that doesn't make sense for several reasons. Here are a few:
1. Penn Station. The city's plan for revitalizing the Penn Station area (which is still in process) has called for creating an office district around the country's busiest transit hub. As well it should. 15 Penn Plaza, which went through the approvals process, was to be the "1 Vanderbilt" of the area - with the approved development rights transfer depending on the numerous transit improvements to and around Penn Station, including a reopening and widening of the passageway between the Herald Square lines, the PATH, and Penn Station.
2. Midtown East/Hudson Yards. The claim that they are off and behind everybody on the west side and downtown at the WTC is also flawed. The WTC has taken over a decade to rebuild because the Downtown market has always been slower to absorb new office space, particularly the large amounts that will be absorbed with the new WTC. That is because not everyone wants to or is looking to move Downtown.
There are few towers of this size on the west side waiting for tenants to be built - 50 Hudson Yards and the Spiral. You can add 2 Manhattan West to that equation. Related has one more large scale office tower planned for the western half of the yards, but that's something that will happen after the current railyard development is complete.
As far as Midtown East goes, look at the speed of work that went on getting the site of One Vanderbilt ready for construction. They moved with a purpose because they wanted to get it done. However, with the rezoning of the area still in the approvals process, there is no way developers are saying they aren't going to plan any more office towers there because they are behind progress of the Hudson Yards and the WTC.
3. Apartment tower. Even if - and its a big if - the City approved plans for the conversion of that space to residential, it would be 3 msf of apartments/condos. Compare that to the size of the Central Park Tower, which is less than 2 msf. I could only see that done with maybe a 2 msf tower and 1 msf of condos on top, or something to that effect.
I don't think the city will be happy at all with anything less than getting new office space built on the site. Other than that, Vornado will just have to live with the hotel, but there's still the matter of those valuable development rights. Vornado holds numerous properties in the area, but I doubt the city would allow the transfer of those rights from the Manhattan Mall to another site.
I remember when Brookfield said they wouldn't be building Manhattan West because of the rents that would be required to do it. But look what's rising now.
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