Earlier this year, the New York Governor’s Office announced plans to construct 10 towers comprised mostly of office buildings around Penn Station to help pay for renovation of the station. According to a spokesperson at the governor’s office, the station’s renovations are expected to cost between $6 and $7 billion and will take place between four and five years after construction begins. According to The New York Times, though, the new towers are not slated to be complete until 2044.
The 10 new towers will be built between 30th and 34th street, stretching from Sixth Avenue near the Empire State Building to the West Side Highway. The state will be implementing design controls to protect views of the Empire State Building along 33rd Street and will set height limits for the proposed buildings. The state will also be limiting the size of new building commercial lobbies and will require that 40% of every building frontage is an “active use,” such as retail and community facilities.
In addition to office buildings, the governor’s office has mandated one building as entirely residential, with 162 permanently affordable units. According to the governor’s office, this is more than the entire number of residences that would be displaced if the southern expansion of Penn Station occurs. In total between all of the new towers, some of which are mixed-use, there will be 1,800 residential units, 540 of which will be permanently affordable. Three fourths of the towers will be office spaces, while the rest would include storefronts, residential units and a 472-room hotel. The towers will also include new entrances to Penn Station.
The primary purpose for building the 10 commercial towers, the governor’s office stated, is to pay for Penn Station’s renovations. After the towers are built, developers will not pay property taxes. Instead they will contribute an as of yet undetermined amount toward repaying the costs to upgrade Penn Station. The developers of the towers will also be paying for the construction of the buildings.
The New York Times has compared the plan to the recent Hudson Yards developments, which include office towers, retail and residencies. At the Hudson Yards, though, developers’ payments are significantly less than they would have paid in property taxes. According to another New York Times analysis, the property-tax breaks for the Penn Station buildings could total $1.2 billion, leaving financing short by billions of dollars. This deficit would mean the state and taxpayers would have to make up the difference.
The governor’s office has claimed the new development project will not raise taxes. It has not yet been announced how much each building will pay in lieu of taxes, and it is not yet known how long it will take for those payments to cover the costs of Penn Station renovations.
The New York Times also pointed out that three years after the Hudson Yards developments have gone up, those buildings have not met expectations, with office tenants downsizing as more and more people choose remote work. In addition, a quarter of the luxury condos in Hudson Yards remain unsold. Despite these facts, Governor Hochul is betting on workers to return to the office and hoping that firms will be seeking out office space by the time the towers are fully developed.
As a whole, the new initiative has received major support from city officials.
“The integration of commercial growth and public transportation is a model of sustainable growth for the future, and I applaud our partners in government and the private sector for this plan that will spur a revitalization of the business district surrounding the station for decades to come,” said Empire State Development Chief Operating Officer and Executive Deputy Commissioner Kevin Younis.
The plan was approved by a unanimous vote by the board of Empire State Development, with approval from Mayor Eric Adams.