NEW YORK – Will the tourist-filled, money making Hotel Pennsylvania across from Penn Station someday be demolished?
Maybe, according to Vornado Realty Trust CEO Steve Roth’s comments to Wall Street analysts last week during the company’s Q2 earnings call. The popular tourist hotel is known for its low rates sits across the street from the busiest train station in the USA – an area that Vornado dominates as the landlord and for years has wanted to upgrade.
A quick check on the hotel’s website shows you can book a room tonight for $229 – less than the average rate for the city – or $195 with a discount for AARP members or government employees.
Vornado owns the hotel plus nearly 8 million square feet of Penn Station-area office space. For years, Vornado has wanted to update its buildings, maximize usage of the real estate and lure higher paying tenants to ultimately lift rent prices. And with the economy improving, Vornado’s CEO says they’re looking hard at the hotel again.
Plans by other land owners are already moving ahead. Recently, for instance, I broke the story for the Wall Street Journal that a sleek Renaissance hotel is being built nearby. It will be the flagship for the chain.
“We have to change the neighborhood. We are hard at work,” Roth told analysts during the Q2 earnings call. The plans “require world-class sport in terms of architecture and design, which we are up to our eyeballs in.”
Before the financial collapse in late 2009 and ensuing recession, Vornado had obtained government approvals to build a 3-million-square-foot tower on the Hotel Penn’s site. It would have housed a major financial services tenant and other companies, Roth said on the call. But the plan died during the recession.
“We abandoned that (plan for “15 Penn Plaza”) because it seemed highly unlikely that we would be able to land such a tenant, and we have been focusing in the recent past on renovating the hotel,” he said.
Today, with the economy improving, Roth said they’ve been getting “intriguing” interest from companies that might want that office space so today. So now, Vornado is “going down two paths.”
1. Renovate Hotel Pennsylvania, or
2. Land a major office tenant to anchor a newly built tower on the site
“We don’t have anything specific that we’re going to — that we’re able to go to public with yet. This is not a short-term endeavor. It’s 3 or 4 square blocks of the City of New York in a very, very, very crowded district on top of the busiest train station in North America,” Roth said.
Vornado had previously told analysts that they were considering spending $250 million to $300 million on the Hotel Penn. The investment is now on hold, Roth said, and it will ultimately multiply regardless since Vornado plans improvements “well beyond” the hotel.