Vornado Realty Trust has announced plans to build a new rental tower near Penn Station, with an estimated cost of $350 million. The project will be located at the northeast corner of West 34th Street and Eighth Avenue and is expected to include 475 apartment units, according to Vornado president Michael Franco.
The company intends to use New York State’s 485x program for the development. This program provides tax incentives for projects that incorporate affordable housing, though specific details about the number of income-restricted units at 484 Eighth Avenue have not been released.
The site is central to CEO Steven Roth’s longstanding goal of transforming the Penn District. Progress on this vision was delayed by the pandemic, and local officials have since encouraged Vornado to focus on residential development instead of office buildings.
Vornado has already invested $1.2 billion in renovations at Penn 1 and Penn 2. The company recently proposed a pedestrian bridge connecting the towers’ second floors, but community board members expressed concerns about potential impacts on views of the Empire State Building.
The planned rental building represents a shift in strategy for Vornado, which has historically concentrated on Midtown office properties. While controlling approximately 20 million square feet of commercial space, Vornado has begun reducing its office holdings and increasing its investment in residential real estate. CEO Steven Roth has highlighted New York’s shortage of apartments as a reason for this change in direction.
Previously, Vornado’s residential projects included developments like 220 Central Park South and an interest in Tribeca’s Independence Plaza, though its portfolio remains dominated by office assets.
This move toward more residential projects coincides with Vornado considering selling high-profile office properties outside New York City. Roth has mentioned possible sales such as Chicago’s Merchandise Mart and a minority stake in San Francisco’s 555 California building, co-owned with the Trump Organization. These potential divestments could further accelerate Vornado’s transition toward focusing on apartments in New York.
“Vornado Realty Trust has divulged some details about its long-simmering plans for a rental tower across from Penn Station.”
“The real estate investment trust is preparing to spend roughly $350 million to build a 475-unit apartment building at the northeast corner of West 34th Street and Eighth Avenue, Vornado president Michael Franco told investors.”
“The developer plans to leverage the state’s 485x program, which offers tax breaks for projects that include affordable housing, though details on how many units would be income-restricted at 484 Eighth Avenue weren’t disclosed, Crain’s reported.”
“The Eighth Avenue site is at the heart of Roth’s decades-old ambition to reimagine the Penn District. That vision stalled during the pandemic and elected officials have since urged Vornado to prioritize housing over glassy office spires.”
“The company has already sunk $1.2 billion into revamping Penn 1 and Penn 2. It recently unveiled plans for a pedestrian bridge linking the towers’ second floor, which drew pushback from community board members concerned about Empire State Building views.”
“The tower on Eighth Avenue would mark the latest in a major shift in strategy for Vornado, long synonymous with Midtown office towers. The firm controls 20 million square feet of commercial space but has been trimming its office footprint and leaning harder into residential. CEO Steven Roth has spent months signaling the pivot, calling out New York’s apartment shortage.”
“Vornado has dabbled in resi before — most notably with 220 Central Park South and its stake in Tribeca’s Independence Plaza — but its portfolio has remained office-heavy.”
“The rental play also comes as Vornado explores shedding trophy office assets elsewhere. Roth recently floated selling the Merchandise Mart in Chicago and its 30 percent stake in a Trump Organization-owned building at 555 California in San Francisco.”
“If executed, those exits could accelerate the REIT’s strategic refocus on New York apartments.— Holden Walter-Warner”
