View Poll Results: Hotel Pennsylvania should be replaced with the proposed office building

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  • Yes

    76 44.97%
  • No

    93 55.03%
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Thread: Hotel Pennsylvania - by McKim Mead & White - to be replaced by 15 Penn Plaza

  1. #166

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    CoStar Group (costar.com)

    As NYC Shifts To a Landlord's Market, Office Reigns in Manhattan
    High Rents, Low Vacancies and a Growing Demand for Space Expected To Drive The Next Big Construction Boom


    January 17, 2007
    Written by Jillian Ambroz


    Office is king again in Manhattan. Rents are up, vacancies are down and shovels are hitting the dirt. There are even a few projects that could see a change in proposed use from hotel or residential to office.

    It's not surprising that the Big Apple is taking a shine to the office market again after a few sluggish years that saw developers gravitate to the quick returns of residential development. In 2005, a paltry 200,000 square feet of office space delivered in Manhattan. Last year, the number ticked up to 3 million square feet, but that included the 1.7 million-square-foot 7 World Trade Center and the 856,000-square-foot Hearst Tower in Midtown.

    Right now, in just Midtown and Lower Manhattan, there are 8.2 million square feet under construction in five buildings. And more is likely on the way, thanks to improving fundamentals.

    The vacancy rate for the city dropped to 5.9% at the end of last year, compared to 7.1% at the beginning of the year, according to CoStar information. About 7 million square feet was absorbed over the year and rents moved up to $49.66 per square foot, up 4.6% from the end of the third quarter. Class A rents climbed to an average of $58.79 per square foot.

    Vornado Realty Trust (NYSE: VNO) is planning to capitalize on the office sector's renewed momentum by transforming its Hotel Pennsylvania property at 401 Seventh Ave. and 32nd Street into a new 2.5 million-square-foot office tower with 500,000 square feet of trading space, according to published reports.

    The Paramus, NJ-based REIT has toyed with the idea of redeveloping the property for years, but seemed to be happy with the performance of the property as a hotel. Perhaps it was just waiting to land the right anchor tenant. Now the buzz is that Lehman Brothers will anchor the redevelopment and consolidate its New York operations there.

    Vornado is also busy drafting its plans for Moynihan Station with Related Cos. That project will see a complete reworking of Penn Station and if Vornado has its way, it will turn Madison Square Garden into a new office complex, too.

    The deal to redevelop the Garden would include up to 5.5 million square feet of development rights at that site. Vornado and Related reportedly want to build two more towers there, one office and perhaps another for residential or hotel use.

    Ken Ruderman, executive managing director with Studley Inc., calls the project "The New Rockefeller Center."

    "I believe this regime of Vornado will pull this off. If they put the headquarters for Lehman right there, anchoring their plan, that's a hell of a great start -- like 30 Rock coming to town. And just take it from there," he said.


    Vornado's not the only one rejiggering plans and reaching for the shovel. Macklowe Properties has reportedly changed its development plans for a site at the corner of Madison Ave. and 53rd St. to build an office tower where it had planned to construct a luxurious hotel and residential building.

    There's been talk for a while that the 632,700-square-foot Lord & Taylor flagship store at 424 Fifth Ave. and 38th St. could be redeveloped to include more office space. JP Morgan Chase is said to be kicking the tires at a possible office development there. In October, Federated Department Stores Inc. sold the building, and an adjacent lot at 436 Fifth, to National Realty & Development Corp.

    Over on the West Side, there are a couple of office projects brewing. A joint venture between SJP Properties and Prudential Real Estate Investors plans to erect a speculative 1.1 million-square-foot Class A office at the corner of Eighth Ave. and 42nd St. in Times Square.

    Boston Properties Inc. (NYSE: BXP) is believed to be planning a new office development on a site it recently acquired at Eighth Ave. between 54th and 55th streets. The REIT plans a 1 million-square-foot office tower on a site that was earmarked for a Hyatt hotel by the previous owner, Robert Gladstone.

    Downtown, developer Larry Silverstein is toiling away on the plans for the new World Trade Center. Over the next four to five years, Silverstein Properties has plans to deliver about 10 million square feet of commercial space in four buildings.

    Now it looks as if the fifth planned tower may go office, too. Though the former Deutsche Bank building site at 130 Liberty St. was slated for residential development, JP Morgan Chase is talking to the Port Authority about developing a 57-story office tower there, according to a recent report in the New York Post.

    Nearby, Goldman Sachs is in the midst of building its much ballyhooed, 43-story, 2.1 million-square-foot office tower on West St. between Vesey and Murray streets. The massive office project is expected to deliver in 2009.

    The downtown projects currently under construction are 100% pre-leased, according to CoStar information. And the Midtown projects are 83% pre-leased, so any projects built on spec, likely won't stay that way for long.

    There are plenty of tenants evaluating the market for large blocks of space -- upwards of 200,000 square feet -- and given the falling vacancy rate, they may be looking to anchor a new project. The list of prospective tenants-on-the-move includes Viacom, PricewaterhouseCoopers, HSBC, Bank of Tokyo, the NBA, Ogilvy & Mathers and Lehman Brothers.

    Ruderman, who handles Midtown lease deals for Studley, says he has lease situations on his radar screen as far out as 2011 to 2015. He references a deal that his firm did 12 years ago when law firm Willkie Farr & Gallagher LLP inked a deal for space at the Equitable Building three years before its lease expired at Citicorp Center.

    That kind of long-view strategy is much in play these days and will likely become the norm as fundamentals continue to improve. Tenants will want to lock-in deals now. Especially while rents continue to climb, where in Midtown, the top deals are hitting well above $100 per square foot.

  2. #167

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    Is Lehman's HQ currently the 40 story (or so) building on 7th and 49th? If so, that seems to be quite a small space considering the needs of financial companies these days.

  3. #168
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    yeah thats there HQ. the bought it from Morgan right after 9/11 when they needed to get something quick. About a month latter they realised that it is way to small and not built to there needs.They have had to rent also at a building on park ave and on ave if americas to keep there staff levels.

  4. #169

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    The current Lehman building that they got from Morgan was built by Morgan a good 30 stories shorter than was allowed as of right. Very shortsighted IMO.

  5. #170

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    Quote Originally Posted by kliq6 View Post
    yeah thats there HQ. the bought it from Morgan right after 9/11 when they needed to get something quick. About a month latter they realised that it is way to small and not built to there needs.They have had to rent also at a building on park ave and on ave if americas to keep there staff levels.
    Thnx. I thought so.

  6. #171
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    Quote Originally Posted by JMGarcia View Post
    The current Lehman building that they got from Morgan was built by Morgan a good 30 stories shorter than was allowed as of right. Very shortsighted IMO.
    That's quite a bit of air rights left.

    Any chance it gets transferred to another site?

  7. #172
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    1600 broadway took 10 FAR from it

  8. #173

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    there is a rendering of this new Tower in the REBNY banquet journal
    its just of the first like 7 floors on one angle and the Glass looks like the BLOOBERG TOWER it will ba called 15 Penn Plaza,
    so maybe we are in for another Cesar Pelli or now known as "Pelli Clarke Pelli"

  9. #174

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    Thanks for the heads up. Hopefully somebody can grab a copy and post it here.

  10. #175

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    Quote Originally Posted by jeffpark View Post
    there is a rendering of this new Tower in the REBNY banquet journal
    its just of the first like 7 floors on one angle and the Glass looks like the BLOOBERG TOWER it will ba called 15 Penn Plaza,
    so maybe we are in for another Cesar Pelli or now known as "Pelli Clarke Pelli"
    Does it appear to look the same as the latest rendering that has been posted (which I believe is an old design)?

  11. #176

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    Quote Originally Posted by jeffpark View Post
    there is a rendering of this new Tower in the REBNY banquet journal
    its just of the first like 7 floors on one angle and the Glass looks like the BLOOBERG TOWER it will ba called 15 Penn Plaza,
    so maybe we are in for another Cesar Pelli or now known as "Pelli Clarke Pelli"
    I surely hope it doesn't look like the Bloomberg Tower, at least not at the top. But 15 Penn Plaza, interesting. We'll probably end up calling it something else (Lehman tower?)

  12. #177

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    Lehman eyes 400,000 s/f at 1271 Ave. of Americas
    Lehman Brothers is said to be close to signing a 400,000 s/f lease for space that could serve its expansion needs while it waits for a new Manhattan office tower to be developed.

    Although the global investment bank has a reputation among city brokers for being a fickle tenant that has flirted with large leases in the recent past only to back out or take space elsewhere, the firm has zeroed in on a block of space at 1271 Avenue of the Americas that one of the building's largest tenants, Time Inc., has had on the market for sublease since March.

    The space would come with rents in the $70s per s/f and a ten-year term, a relatively short period for such a significant block. It is common for very large tenants to make 20-25 year commitments when leasing hundreds of thousands of square feet and sources say that Lehman's selection of a short-term deal is indicative that the company has a larger real estate strategy in the works.

    Indeed, Lehman Brothers is in talks with Vornado Realty Trust to be an anchor tenant in a major office tower that Vornado is planning to develop on the site of the Pennsylvania Hotel. A Vornado executive confirmed Lehman's interest in the deal, which would be a boon to Vornado's plan to remake the office district surrounding Penn Station. Despite having some of the best transportation infrastructure in the city, the neighborhood hasn't completely dusted off the grit nor shed the antiquated low rise, brick buildings from its past as a center for manufacturing and the garment industry. But Vornado has purchased a number of buildings in the area and, along with The Related Companies, has plans to redevelop Penn Station, all in the hopes of erecting brand new class A buildings in a neighborhood it is trying to convert into a destination for corporate tenants who typically opt for Midtown's more established office corridors. A deal with a firm of Lehman's clout would be a huge endorsement of Vornado's vision for the area and also would attach a timeline to the project's development because the investment bank undoubtedly would need the space ready for occupancy before the 10-year deal it is currently negotiating expires.

    A CB Richard Ellis team led by the firm's New York co-chairman, Robert Alexander, is representing Lehman in its lease at 1271 Avenue of the Americas. Studley represents the sublessor Time Inc. The deal is for floors 35, 37 through 45, and part of 46. Lehman Brothers currently occupies space in 1301 Avenue of the Americas, 50 Broadway, 399 Park Avenue and 745 Seventh Avenue, which it purchased from Morgan Stanley after 9/11 for its headquarters.

    COPYRIGHT 2006 Hagedorn Publication
    Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

  13. #178
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    ^ that's big news.

  14. #179

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    Crain's New York

    Lehman close to taking Time Inc. lease

    By: Julie Satow
    February 1, 2007

    After pounding the pavement for the past several months in search of expansion space, Lehman Brothers is close to signing a deal for a large block of office space on Sixth Avenue.

    The investment bank is set to take a 10-year sublease from Time Inc. for 414,000 square feet at 1271 Sixth Ave. The space, on floors 35 and 37 through 46, has an asking rent of $70 a square foot.

    The building, between West 50th and West 51st streets, is known as the Time & Life Building. The publishing giant, which announced plans earlier this month to lay off nearly 300 employees, will continue to occupy most of the building's 2 million square feet.

    "While we are currently looking at plans to lease out several of the top floors of our building, 1271 will continue to be Time Inc.'s headquarters," said a spokeswoman for the company. She would not comment on the impending lease.

    Brokers for Studley, which represented Time Inc., and CB Richard Ellis, which represented Lehman Brothers, had no comment.

    Lehman signed the short-term lease in expectation of a future move into a ground-up office building that Vornado Realty Trust is planning for the site of the Hotel Pennsylvania across from Madison Square Garden. The investment bank is also negotiating an option to stay on at 1271 Sixth Ave. after the sublet expires.

    Lehman already occupies space at 1301 Sixth Ave., one block north of 1271 Sixth Ave. Its headquarters are at 745 Seventh Ave., between West 49th and West 50th streets.

  15. #180

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    I wonder how much of the Vornado Tower will be pre-leased before it's even built. It seems like Lehman and perhaps the NBA might occupy 1.5 M sf.

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