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Vornado Says It's On Track to Start One Penn Plaza Renovation This Year

REIT Installing Escalators in Moynihan Train Hall at Penn Station
August 1, 2018
New York real estate investment trust Vornado is on track to begin its planned redevelopment work on its One Penn Plaza office tower later this year under the $200 million it has earmarked for the project.

The firm is still set on "embarking on a physical transformation" of its One and Two Penn Plaza office towers, which represent an aggregate 4.2 million square feet of office space, said David Greenbaum, president of the New York division at Vornado.

Chief Executive Steven Roth sounded bullish on the potential return for these investments, saying the properties are located "in the heart of the new New York and on top of one of the busiest train hubs in North America."

Although the company has a total 397,000 square feet of leases expiring in 2018, more than one-third of those are at One Penn Plaza.

Vornado is also adding to its holdings on the west side of Manhattan. In the third quarter, the company said it expects to deliver two new boutique buildings: 512 W. 22nd St. in Chelsea and 606 Broadway in Lower Manhattan's SoHo neighborhood.

Traction is being made on the new Moynihan Train Hall, a $1.6 billion redevelopment of the Farley Post Office Building by Penn Station, currently in development by a team of Vornado, Related Companies and Skanska USA. Vornado has a 50.1-percent interest in the Moynihan Train Hall and has already spent $42.5 million on the project.

"The Moynihan train hall is being developed at a rapid pace. Seventy-five percent of new escalators down to track level have been installed. The first glass of its mid-block skylight will appear next month, as framing of the acre-sized skylight overlooking the train hall is well underway. We’ve commenced demolition of the post office installations to begin preparation of future office floors for tenant fit-outs," Greenbaum told investors on a conference call to discuss earnings on Tuesday.

Vornado signed 37 office leases totaling 611,000 square feet in the second quarter, garnering what it called a record average starting rent of $88.28 per square foot. It signed 49,000 square feet of street-level retail in eight leases with an average starting rent of $165.98 per square foot. Office leases signed in the second quarter carried an average term of 10.5 years, with the figure being nine years for retail leases.

As of the second quarter, Vornado had 260,000 square feet of leases out for active negotiation, Greenbaum added.

Diana Bell, New York City Market Reporter  CoStar Group   
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