NEW YORK | 15 Penn Plaza (Hotel Penn) | 1,050 FT / 315 M | 52 FLOORS

[NYguy]

https://therealdeal.com/2022/11/01/office-stocks-are-stupid-cheap-vornados-roth-says/amp/

Office stocks are “stupid cheap,” Vornado’s Roth says


BY KATHRYN BRENZEL
NOV 1, 2022

The demolition of the Hotel Pennsylvania is on track to be completed by the end of next year, but then what?

Vornado Realty Trust CEO Steve Roth cast doubt on its project Tuesday during the real estate investment trusts’ third quarter earnings call — yet also predicted a comeback for beaten-up office sector stocks, which he called “stupid cheap.”

“I must say, the headwinds and the current environment are not at all conducive to ground-up development,” he said.

When asked about the level of pre-leasing necessary to move forward with the office tower and if Vornado is considering non-office uses for the project, dubbed Penn 15, Roth opted to “duck” the question, in his words.

“In terms of changing uses and what have you, that’s not something that we are going to get into now,” he said.

Later in the call, Roth said Vornado is “absolutely, strongly convicted” about its plans for the Penn District, and is confident that companies and people will continue to flock to New York.

A little more on that…



https://www.marketscreener.com/quote/sto...2022-Earnings-Call-Nov-01-2022-42167393/

Our next question is from John Kim with BMO Capital Markets.

Question
John Kim (Analysts)

You talked about the cautious environment. There was a lot more of an optimistic case in the post this week on New York office, and in particular, PENN15. I was wondering if you could provide an update on the project, how much preleasing you would need to move forward with the development? And if there's any consideration to change the use of the project to have less office going forward?

Answer
Steven Roth (Executives)

John, thanks for the question. I'm going to duck the question. a couple of things. I did say in my prepared remarks that the current environment makes grounds up the development very difficult. And I meant it. So that's number one. Number 2 is in terms of changing uses and what have you, that's not something we're going to get into now.

Steven Roth (Executives)

We are absolutely strongly convicted about what we're doing in the PENN District. We think that, that is going to be another center of New York, and an extraordinary success. So we're very, very, very excited about that.

[JMKeynes]

Did he talk about 350 Park?

[NYguy]

Originally Posted by JMKeynes

Did he talk about 350 Park?

I didn’t see anything.

[streetscaper]

So sounds like what I've been worried about and have mentioned a few times on the forums... looks like this lot will remain empty for a while (could be even years) before they [hopefully] start construction on a tower.

We're losing a decent pre-war tower that completed the street wall and fit in nicely with pre-war neighbors in a very prominent location for what may be a dusty lot like Vornado's other Penn District property on 34th and 8th (been empty for years now).

Hopefully being across from Penn helps solidify the pre-leasing sooner but I'm not confident.

[JMKeynes]

Originally Posted by streetscaper

So sounds like what I've been worried about and have mentioned a few times on the forums... looks like this lot will remain empty for a while (could be even years) before they [hopefully] start construction on a tower.

We're losing a decent pre-war tower that completed the street wall and fit in nicely with pre-war neighbors in a very prominent location for what may be a dusty lot like Vornado's other Penn District property on 34th and 8th (been empty for years now).

Hopefully being across from Penn helps solidify the pre-leasing sooner but I'm not confident.

If you recall, that's what Roth did at the old Alexander's site on Lex., which sat vacant for years. He's a putz. If he doesn't have a tenant, he should make a nice public plaza there until he finds one.

[NYguy]

Originally Posted by streetscaper

So sounds like what I've been worried about and have mentioned a few times on the forums... looks like this lot will remain empty for a while (could be even years) before they [hopefully] start construction on a tower.

We're losing a decent pre-war tower that completed the street wall and fit in nicely with pre-war neighbors in a very prominent location for what may be a dusty lot like Vornado's other Penn District property on 34th and 8th (been empty for years now).

Hopefully being across from Penn helps solidify the pre-leasing sooner but I'm not confident.

Jeezus, what are you talking about? It will take another year for this building to come down. It's the only building with the potential to start right away, the other towers are years away from even starting. The guy said he doesn't think he will be starting anything in the next year. Surprise - Vornado was not going to start anything in the next year. Then Penn Station redevelopment plan won't even be finalized until some time next year. Meanwhile, Vornado has been filling up 1 and 2 Penn as well as signing leases at some of its other surrounding properties.



https://nypost.com/2022/11/01/vornado-pumps-brakes-on-gov-kathy-hochuls-penn-station-project/

“I must say that the headwinds in the current environment are not at all conducive to ground-up development,” Roth said.

Asked if it meant he would change or scale down the state-endorsed plan for the Penn Station neighborhood, he said, “That’s not something we’re going to get into now.” He apparently meant he wasn’t ready to discuss the matter.

But Evercore ISI analyst Steve Sakwa told Crain’s that Roth’s statement means the project is “certainly delayed” due to lack of office demand. “They won’t spend billions to build an empty building,” he said.

Roth’s retreat doesn’t mean the giant Penn district project is dead, since Vornado could not start building for several years in any case.

.....Matthew Gordon, a spokesman for the Empire State Development agency which is in charge of the Penn project said, “Quarterly conditions may fluctuate but Gov. Hochul’s commitment will not. We have always said that this was a long-term project to be built over more than a decade and designed to withstand temporary market adjustments.”

[NYguy]

NOVEMBER 2, 2022

[Xing Lin]

Penn 15 as seen from the Summit by day:

and with very rough block models of its eventual neighbours of the Empire Station Complex:

Original photo by wyliepoon, on Flickr

[Busy Bee]

About as attractive as the Long Lines Building.

[JMKeynes]

I don’t think that this will be built for a while. It seems that some big fish are lining up for the 2m sf at 175 Park. I don’t think that Citidel will occupy more than 1m sf of the 1.8 msf at 350 Park. There will also be space available at prime locations at 341 Madison and at 405-417 Park. For that matter, 3 Hudson Blvd is in a better location than 15 Penn.

15 Penn is a disgusting location. Vornado needs to clean up the area before a tenant commits to leasing 1m sf at $100/sf +. Morgan Stanley won’t be banging down Vornado’s door to move its HQ to this dump.

[streetscaper]

Originally Posted by Busy Bee

About as attractive as the Long Lines Building.

lol yup, not a welcomed addition at all imo. I wish developers would stop using Foster at this point.

[Xing Lin]

Originally Posted by streetscaper

lol yup, not a welcomed addition at all imo. I wish developers would stop using Foster at this point.

Foster and his firm have shown they can do better than this when it comes to offset cores. In Sydney, Foster+Partners have just finished up a building with a side core, and it uses glass elevators and curtain wall facades above where each elevator core ends:

Both Salesforce Sydney and Penn 15 have their cores facing a street and not a lot boundary, so there should be no reason P15 can't have glass elevators as well other than cost-saving.

Norman Foster's long-time colleague Richard Rogers also designed an example of much better offset cores in Sydney, with his Barangaroo International Towers, also using glass elevators (though these are turned sideways to face the harbour view) and curtain walls where the shafts end:

(Source: https://sydney-city.blogspot.com/2017/07/barangaroo-international-towers.html)
IMO that is exactly how Penn 15's core should have been designed.

[NYguy]

Originally Posted by Xing Lin

Penn 15 as seen from the Summit by day:

and with very rough block models of its eventual neighbours of the Empire Station Complex:

Original photo by wyliepoon, on Flickr

Good work as usual.

[streetscaper]

Originally Posted by Xing Lin

Foster and his firm have shown they can do better than this when it comes to offset cores. In Sydney, Foster+Partners have just finished up a building with a side core, and it uses glass elevators and curtain wall facades above where each elevator core ends:

Both Salesforce Sydney and Penn 15 have their cores facing a street and not a lot boundary, so there should be no reason P15 can't have glass elevators as well other than cost-saving.

Norman Foster's long-time colleague Richard Rogers also designed an example of much better offset cores in Sydney, with his Barangaroo International Towers, also using glass elevators (though these are turned sideways to face the harbour view) and curtain walls where the shafts end:

(Source: https://sydney-city.blogspot.com/2017/07/barangaroo-international-towers.html)
IMO that is exactly how Penn 15's core should have been designed.

Exactly, in NY he seems to be consistently giving us the shittier designs with exposed cores lately. :-(

[Crawford]

Build it, already! Looking forward to Empire District getting going.

[Doubleu1117]

Originally Posted by NYguy

This is what we've been waiting for ever since 15 Penn was first approved, and got that transit improvement bonus. Now though, it seems they are not entirely certain they will rebuild the passage where it is, or move it south. That won't really matter though, it's the connection that's needed.

Quoting an old post. But have they decided where the 34-Herald/ Penn tunnel will be? Gimbels Tunnel? Which street does Gimbel's run under, is its 33rd or 32nd? If the connection was under 33rd it could flow very nicely into the new expanded LIRR concourse and continue straight through to Moynihan. Although if it's more towards 32nd, there are benefits tying it in to the Penn Station South expansion.

Something interesting I was thinking about, you will be able to walk from 6th ave all the way to 12th ave without ever walking on the street. Herald Sq > Gimbels > LIRR concourse > Moynihan > Manhattan West Elevated Park > High Line Connector > High Line.

edit: Oh not completely actually, you will have to cross 9th ave from Moynihan to Manhattan West, so just one street crossing.

[NYguy]

Originally Posted by Doubleu1117

Quoting an old post. But have they decided where the 34-Herald/ Penn tunnel will be? Gimbels Tunnel? Which street does Gimbel's run under, is its 33rd or 32nd? If the connection was under 33rd it could flow very nicely into the new expanded LIRR concourse and continue straight through to Moynihan. Although if it's more towards 32nd, there are benefits tying it in to the Penn Station South expansion.

That's still under consideration by the state, and those involved with the Penn Station planning. Personally, I think they should be able to do both. More circulation is always better than less.

Something interesting I was thinking about, you will be able to walk from 6th ave all the way to 12th ave without ever walking on the street. Herald Sq > Gimbels > LIRR concourse > Moynihan > Manhattan West Elevated Park > High Line Connector > High Line.

edit: Oh not completely actually, you will have to cross 9th ave from Moynihan to Manhattan West, so just one street crossing.

Yeah, those connections will be possible. A lot of people still don't know how to utilized the Moynihan connecter to cross 8th Avenue. But in time, they will. Also, with the southward expansion, a new connection across 8th Avenue. It makes a big difference when trying to get those NJ Transit trains that are primarily on the southern end.

[NYguy]

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[NYguy]

[chris08876]

Credit: Michael Young via NYY