New York City has taken a particular beating in the course of the coronavirus outbreak after initially being dubbed the epicenter of the pandemic. Not only have many city residents picked up and moved out to the suburbs, but workers have largely stayed away from offices and done their jobs remotely instead. That's caused countless local businesses to lose out on revenue, and as such, many are still at risk of shuttering.
At this point, New York City could really use a pick-me-up. And New York Governor Andrew Cuomo has an idea to help breathe new life into the city.
Could Penn Station get a revamp?
Governor Cuomo is seeking to overhaul Penn Station, and if his plan goes through, it could be a real game changer, not just for Midtown Manhattan but the city as a whole.
As part of the overhaul, 10 new large-scale buildings would be built in Midtown by 2038 in an area called "The Penn District'' by project developers. Those buildings would include office, retail, and residential space.
At least one of those 10 buildings would be a massive tower comparable in size to the Empire State Building, according to Vornado Realty Trust (NYSE: VNO), the real estate investment trust (REIT) that controls a majority of the sites for the new project and has been pegged to help develop the area. Vornado is already making plans to raze its Hotel Pennsylvania in the area.
All told, the 20 million-square-foot project could add more real estate to the city than Hudson Yards' 18 million square feet. It could also end up being five times as large as the proposed Amazon (NASDAQ: AMZN) headquarters in Queens that never ended up coming to the city.
An important revival for New York
Supporters of Cuomo's plans say that a new, improved Midtown Manhattan could help fuel New York City's recovery from the coronavirus pandemic and breathe life into the city's office market, which has been notably sluggish for the past year. The project would also allow the state to use eminent domain to raze 50 buildings to make way for new tracks for Penn Station itself, thereby making it an even more robust transit hub. That could, in turn, generate more revenue for the city by boosting tourism. It could also help bring even more commuters into Manhattan, thereby helping local businesses as well.
Of course, the idea of overhauling Penn Station is hardly new. Governor Cuomo first introduced a plan to change up Penn Station and its surrounding area back in 2016. He also talked about such a proposal in his 2020 State of the State address, which was delivered just weeks before the pandemic slammed New York City.
But now, in light of the events of the past year, a revitalized Penn Station seems more important than ever, and if the aforementioned plans come through, it could be a boon to REITs with large concentrations of Manhattan property -- not to mention the people who invest in them.