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Vornado Realty Considers Billboards on 'Penn Platform' Development Site Due to CRE Woes

Vornado Realty Considers Billboards on 'Penn Platform' Development Site Due to CRE Woes
Traded Media
by Traded MediaShare

Vornado Realty Trust, a New York City-based developer, is reevaluating its development plans for a plot of land near Madison Square Garden and the Empire State Building. Initially reserved for a 56-floor office tower, the project, known as "The Penn Platform," is now being reconsidered due to challenges in the commercial real estate sector.

Potential Utilization of the Site

Vornado is exploring various options for the site, including the installation of a 150-foot tall billboard. Additionally, the developer envisions potential uses such as sporting facilities like tennis courts and NCAA-sized basketball courts, or venues for events such as New York Fashion Week. These details were revealed in an online marketing brochure published by the developer and reported by Crains New York Business.

Interim Plans and Response from Vornado

A spokesperson for Vornado stated that the company is currently reviewing several interim options for the site, which formerly housed the Hotel Pennsylvania. The hotel, built in 1919, was closed in 2020 and demolished in 2023. The spokesperson emphasized that the renderings presented are for conceptual purposes only.

Market Challenges and CEO's Perspective

During an earnings call on February 13, Vornado's CEO, Steven Roth, highlighted the challenges facing the commercial real estate market. He referred to the current situation as a "CBD office apocalypse," attributing it to factors such as the rise of remote work and a decline in office demand in capital markets.

Broader Market Trends and Observations

The struggles in New York City's commercial real estate market reflect broader national trends. High interest rates and the remote work trend have contributed to what market expert Larry McDonald describes as a "slow-moving train wreck" in the commercial real estate sector.

Political Pressure for Housing Development

New York state lawmakers have expressed interest in utilizing the site for housing development, according to reports from Crain's New York. This suggests a potential divergence in the proposed usage of the site and highlights ongoing debates surrounding urban development and land use.

Published: February 19, 2024

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