Hotel Pennsylvania was once the largest hotel in the world, but it permanently closed in 2020 and was demolished in 2023 – opening the door for a new era on one of Manhattan’s prime plots of land. The owners, Vornado Realty Trust, have made several pitches to the state, including their most recent proposal, but nothing has stuck yet.
The History Behind Hotel Pennsylvania
Hotel Pennsylvania was a 22-floor hotel located at 401 Seventh Avenue in Manhattan, NYC – across the street from Madison Square Garden and Pennsylvania Station. It was designed by McKim, Mead and White and developed by the Pennsylvania Railroad. Construction began in 1916, and the hotel was open for business three years later.
It was renamed the Hotel Statler in 1948 when Statler Hotels bought the property. It endured several other name changes during its time – including the Statler Hilton, New York Statler, and New York Penta. It was a staple in the Manhattan area for 100 years, but then they knocked it down.
Landmark Hotel Demolished In 2023
In 1997, Vornado Realty Trust purchased the hotel with the help of Ong Beng Seng – though Vornado, the largest commercial landlord in NYC, eventually bought Ong’s stake for total control of the building. Steven Roth (founder and CEO of Vornado) considered tearing the building multiple times over the next two decades.
In 2020, Hotel Pennsylvania finally shut down – for good. Demolition began in Jan. 2022, but it wasn’t until Oct. 2023 that the above-ground structure was completely gone. As of today, it’s a vacant lot sitting right across the street from Madison Square Garden – a total waste of prime space!
Vornado’s Original Plan Involved Commercial Offices
Vornado has been planning to turn the plot of land into a massive skyscraper office building – dubbed 15 Penn Plaza – for more than 10 years. They’ve floated the idea around numerous times, but kept tabling it due to various issues (anchor tenants backing out, market slipping, etc.).
In 2022, new renderings of the proposed plan were revealed – and they were beautiful. The building was 56 stories tall and stood 1,200 feet in the air – bigger than the Empire State Building, which is just a few blocks away. The building would have 2.7 million square feet to work with.
Vornado Rethinking Commercial Real Estate Market
Earlier this week, during an earnings call on Feb. 13, Roth didn’t sound too confident in the commercial real estate market in New York City – and the numbers back it up. The NYC market is still reeling from the effects of COVID-19 pandemic, especially with so many people working from home – as opposed to office buildings.
“We have a CBD office apocalypse involving the work-from-home threat and the total blacklisting of offices in the capital markets,” Roth said last week. And it’s not just New York City that’s experiencing this – it’s happening in major cities across the United States.
Already Scrapped Plans To Gain Casino License
In 2023, Vornado was considering placing a bid to obtain one of three available downstate casino licenses for their Hotel Pennsylvania site. They made the announcement in Jan. 2023, but said no deal was in place and it was just an idea at that time – a concept they were interested in, but not locked in on.
By October, that concept started losing its appeal. During an earnings call, Roth mentioned that it was ‘highly likely that we will not pursue a casino license.’ He didn’t go into depth as to why, but competition likely played a big factor – though a lack of financing and higher interest rates could’ve also played a role in the decision.
Roth Understands How Valuable The Lot Is
In his latest investor call, Steven Roth talked about how ‘valuable’ the Hotel Pennsylvania lot is. While he didn’t have any solutions for the delayed office plan, he said he still very much believes in the area and looks forward to what the future has in store for it – adding that he’s ‘very, very happy with our position.’
“We believe that when you combine Penn District with Manhattan West and Hudson Yards, I mean that’s a hell of enablement. It’s highly sought after. So we believe that these assets will return a very satisfactory return at the get-go and will grow from there as we continue to own them over the next period of time,” Roth said.
Vornado Has New Proposal – The Penn Platform
A few days ago, Vornado Realty Trust released its newest proposal for the coveted lot. While they still have plans to turn it into commercial office space at some point, they’re considering turning it into a temporary, multi-use event area with more than 80,000 square feet of outdoor space and a 150-foot billboard – nearly 15 stories high!
In the renderings, they showed the space being used for everything from fashion shows to concerts, tennis tournaments, basketball tournaments, soccer matches, and much more. Considering its prime (and accessible) location, it could be used for US Open matches or big-time outdoor events – such as Fashion Week. When the commercial office market rebounds, they can move forward with their original plan.
Assemblyman Tony Simone Opposes Idea – Wants More Housing
Tony Simone, who was elected to the New York State Assembly in 2022 and represents the 75th Assembly District, isn’t too fond of the idea. Instead, he believes the lot should be used for residential development – especially since NYC is in a bit of a housing crisis that only seems to be getting worse.
“In the midst of a massive housing crisis, here we have a large vacant parcel, covered by a state plan to expedite development, and it’s being allowed to be turned into tennis courts that no one asked for,” Simone said.
Simone Wants State Lawmakers To Step In
So, what’s Simone’s solution? He wants New York State to take control of the project – especially if Roth and his Vornado team can’t find something constructive to do with the land.
“This is the problem with our land use policy: prioritizing playgrounds for the wealthy instead of desperately-needed housing for everyday New Yorkers. If the current owner of this site is unable to develop one of the most marketable parcels of land in the world to meet New York’s current needs, the state must step in and find someone who can,” said Simone.
