(Bloomberg)—Vornado Realty Trust and Related Cos. completed a deal to redevelop Manhattan’s landmark James A. Farley Post Office Building, part of a $1.6 billion plan to create a modern transit hub across Eighth Avenue from the overcrowded Pennsylvania Station.
The two real estate companies, among the largest property owners in that area, will work with construction company Skanska AB to convert the eastern portion of the Farley Building into Moynihan Station, a skylit annex to Penn Station that would serve Amtrak and Long Island Rail Road passengers. The developers signed a lease with the state of New York, which owns the 1.4 million-square-foot (130,000-square-meter) Farley Building, the Empire State Development Corp. said in a statement Friday.
The project, to be completed by late 2020, will help to relieve pressure and overcrowding for the 650,000 people who use Penn Station every day. New York Governor Andrew Cuomo warned of a “summer of hell” as Amtrak Corp., which owns Penn Station, does track work starting next month.
“It is a magnificent building, outside and inside,” Cuomo said on a conference call with reporters. “We’re talking about 90-foot ceilings. This is a grander hall than at Grand Central Terminal. Remember, more people go through Penn than LaGuardia, Kennedy airport and Newark airport combined.”
Vornado and Related will put about $630 million of their own money into the makeover, according to the statement. They plan to recoup their investment with revenue from leasing about 700,000 square feet of new commercial space -- offices, retail and dining -- in the Farley Building. The rest of the money for the project will come from an array of government sources, including $550 million from New York state.
Vornado is the biggest landlord in the Penn Station area, with more than 8 million square feet of buildings around and on top of the existing transit hub, including 1 and 2 Penn Plaza. The real estate investment trust is led by Steven Roth, who is co-chairman of President Donald Trump’s infrastructure task force, trusted with guiding a projected $1 trillion in investment in public projects. Large infrastructure investments planned included the digging of a new rail tunnel under the Hudson River.
A call to Mark Semer, a Vornado spokesman, wasn’t immediately returned.
Related, whose chairman is billionaire Stephen Ross, is leading the $25 billion Hudson Yards development project west of Penn Station. The Farley Building makeover “will continue the dynamic transformation of the west side and offer unique, large-floorplate class A office space in a historic location with unrivaled access to transportation and vibrant retail amenities,” Jeff Blau, Related’s chief executive officer, said in the statement.
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