Vornado Scales Back MSG Redevelopment Plans
- Jun 04, 2008
Vornado Realty Trust has revealed plans to redevelop Madison Square Garden and the Hotel Pennsylvania on a smaller scale than what was initially expected. Initially, Vornado planned massive redevelopments in the Pennsylvania Plaza district, including a tower for Merrill Lynch headquarters, moving Madison Square Garden and developing its 5 million square feet of air space. However, lack of government approval and the tightening credit market have dashed these plans for the time being. Merrill Lynch was forced to pull out of the tower project when their weakening financial position prevented the firm from obtaining credit to obtain financing. According to a report by Reuters, current plans call for a renovation rather than relocation of Madison Square Garden at its existing site. Vornado will also renovate the Hotel Pennsylvania, which was the site of the proposed Merrill Lynch Tower. Prospective plans call for three floors of retail added to the hotel, which will attach to the Manhattan Mall. The firm also announced the closing of the Virgin Megastore in Times Square. Vornado chairman & CEO Steven Roth indicated on a Webcast that a major reason for the changes to original plans for Madison Square was the unlikelihood that the city and state government would comply with the plans. The change in plans also has called into question the viability of a $3 billion transit hub in New York, a development which CPN reported on in April. As the current Madison Square Garden will remain standing, the plans to redevelop the site above Penn Station, which lies under the arena, cannot go forward. Instead, the firm will develop new entrances to Penn Station.