The powerful head of Vornado Realty Trust appeared to knock the wind out of Gov. Kathy Hochul’s plan to erect new office skyscrapers in the Penn Station area on Tuesday, when Chief Executive Steven Roth said the time is not right for major new development.
Publicly traded Vornado owns most of the 10 sites in the West 30s earmarked for large-scale rebuilding. Roth made the shocking retreat in an investors’ conference call on Tuesday. After he pointed out improvements Vornado has made in buildings near the station that it already owns, he seemed to call a pause in putting up any new ones.
“I must say that the headwinds in the current environment are not at all conducive to ground-up development,” Roth said.
Asked if it meant he would change or scale down the state-endorsed plan for the Penn Station neighborhood, he said, “That’s not something we’re going to get into now.” He apparently meant he wasn’t ready to discuss the matter.
But Evercore ISI analyst Steve Sakwa told Crain’s that Roth’s statement means the project is “certainly delayed” due to lack of office demand. “They won’t spend billions to build an empty building,” he said.
Roth’s retreat doesn’t mean the giant Penn district project is dead, since Vornado could not start building for several years in any case.
Although the proposal for 18 million square feet of new buildings was approved by the state’s Public Authority Control Board, it still faces a gauntlet of environmental and other reviews. At least three lawsuits were recently filed to block the scheme.
Even so, Roth’s statement cast shade on the controversial proposal to remake the Penn district, which calls for wholesale evictions of residents and businesses to make room for new towers that would spin off revenue to pay for a new Penn Station. Vornado has been regarded as the driving force behind the plan, which was blessed by Hochul and her predecessor, Andrew Cuomo. Roth donated heavily to both governors.
Critics say the Penn project would provide tax breaks for Vornado and enrich the company without sufficiently guaranteeing to create a new train station, which is the project’s supposed rationale.
Matthew Gorton, a spokesman for the Empire State Development agency which is in charge of the Penn project said, “Quarterly conditions may fluctuate but Gov. Hochul’s commitment will not. We have always said that this was a long-term project to be built over more than a decade and designed to withstand temporary market adjustments.”
