Steven Roth's missed connection

Welcome to Crain's New York Top Stories. This week, senior reporter Aaron Elstein explores how a Penn Station dream slipped away for Vornado's CEO.

In the fall of 2007, Steven Roth was ready to make his mark on Manhattan’s skyline: an imposing, 2.8 million-square-foot tower on the site of the Hotel Pennsylvania, across the street from Madison Square Garden. The Cesar Pelli-designed tower would be Merrill Lynch’s new global headquarters.

But a tremor ahead of the 2008 crash sank the deal. On the day it was to vote on moving uptown, Merrill's board discovered it was sitting on a $7.9 billion loss thanks to a rotting pile of subprime mortgages. And just like that, Roth recalled, “the deal was swept away.”

Today, Roth still dreams about building on the Hotel Pennsylvania site, which fills most of West 32nd Street between Sixth and Seventh avenues and is tantalizingly close to the hip neighborhoods along the High Line and, to the east, Koreatown. Last year, he demolished the hotel, and in its place has proposed to install tennis courts , which officials say are one of several short-term ideas for the site until the time is right to build again. Fashion shows are another possibility.

“The best use Roth can come up with for some of the most valuable, potentially productive land in the city is a tennis court,” snarked Lynn Ellsworth , co-founder of advocacy group New Yorkers for a Human-Scale City. “That’s an insult to all New Yorkers.”

“Give Roth credit, he’s trying to reimagine the Penn District,” said Alexander Goldfarb , an analyst at Piper Sandler. “It should work out. It just never has.”

Roth, 82, has described his grand plans for the Penn Station neighborhood as his “promised land” and “moonshot.” By that, he means developing about 10 million square feet of new towers, creating the city’s next cluster of supertalls after Hudson Yards and Billionaires Row . Not only would that transform Manhattan’s skyline, but it also would put Roth on equal footing with Steve Ross, the developer of Hudson Yards, whose buildings rent for sometimes twice as much as Roth can command for his.

But after years of waiting for the right time to strike and hoping to land a sweeter incentive deal, Roth may have missed his moment. His moonshot remains on the launching pad, a casualty of the rise of working from home ?and higher interest rates.

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