Next stop, Penn Station

Oct 19, 2016

Historic overhaul of outdated, overcrowded transit center in Manhattan is on New York Gov. Andrew Cuomo's to-do list. By Richard Massey Managing Editor One of the largest infrastructure projects in the United States begins in earnest on April 22, the deadline to submit development proposals for a glittering train hall for the nation’s busiest, and for many the most reviled, depot – New York City’s Penn Station. What’s expected to be at least a $3 billion project includes the renovation and conversion of the James A. Farley Post Office Building into the Moynihan Train Hall between 8th and 9th avenues east-west, and 31st and 33rd streets north-south. The second piece of the puzzle is the actual redevelopment of the adjacent Penn Station, the gritty terminal beneath sports-and-entertainment venue Madison Square Garden. Long an eyesore and obstacle for the hundreds of thousands that commute through the station each day, New York Gov. Andrew Cuomo said the time has come to bring it up to 21st Century standards. “Frankly, it’s a miserable experience,” Cuomo said earlier this year when he announced the project. “It’s a horrible first impression of New York. It’s amazing how long it was tolerated.” The renderings have already been completed by Skidmore Owings & Merrill LLP (Chicago), one of the largest multidiscipline A/E/P firms in the world. The winning bidder may opt to use the drawings created by SOM, as well as the firm’s construction-phase services. A different set of architects and engineers, however, can be used if it doesn’t “adversely impact the project’s schedule or cost,” according to the RFP issued by project sponsors Empire State Development, Amtrak, Metropolitan Transportation Authority, and its affiliated Long Island Rail Road. Bidders can compete for the work under one of three options: Farley building only, Penn Station only, or both together. Bidders can also submit as single entities, joint ventures, or as teams. While the scope of work is tremendous, only a few bidders are expected to compete for the contracts. Developers being mentioned are Extell Development Company, Related, Vornado Realty Trust, and Brookfield – companies that have access to vast amounts of capital, have political cache, and that know the ins and outs of a megalopolis like New York. Consider these baseline qualifications for the Moynihan Train Hall:
  • Application fee: $25,000
  • Cost letter: $1.5M
  • Letter of credit: $15M
  • 20-year pro-forma
  • Audited financials, three years
  • Performance bond: $800M
  • Investment track record in projects exceeding $500M annually
  • At least three transportation projects greater than $250M within the last 10 years
  • At least two retail projects with more than $10M in rental revenue in the last seven years
The entirety of the project is known as the Empire Station Complex, and to get it done, Gov. Cuomo is offering his take on the public-private partnership – in exchange for footing the bill for the renovation, the developer, or developers, will control the site’s office, retail, and hospitality rights through long-term leases. The original Penn Station, considered a Beaux Arts masterpiece designed by McKim, Mead & White, was demolished in 1963. At the time, rail ridership was in decline, but train travel along the East Coast rebounded, and when it did, Penn Station proved to be undersized and inefficient. At around 650,000 people and more than 1,000 trains per day, Penn Station is by far the busiest commuter depot in the nation, and, according to Gov. Cuomo’s office, handles more traffic than JFK, Newark, and LaGuardia airports combined. And as the New York City Department of Planning expects the city’s population to increase to as much as 9 million by 2040, the station’s usage will only increase – as will its potential to generate huge revenues through rents. For F. Eric Goshow, founding partner of New York-based Goshow Architects and a past president of AIA New York State, the Big Apple deserves something grand, not a congested hole in the ground, as is currently the case. “In terms of scale, the need for a big, beautiful entry to New York – it’s nowhere more needed than at Penn Station,” Goshow says. Goshow says he is not surprised Cuomo decided on recruiting the private sector for such a large job. “They think private enterprise can build more cheaply and more efficiently,” Goshow says. “There’s a recognition that private enterprise can do it better.” Perhaps also at stake is the fate of Madison Square Garden, home of the New York Knicks and the New York Rangers. While Gov. Cuomo’s Request for Expressions of Interest/Request for Qualifications, or RFEI/RFQ, only calls for the demolition of the Theater at Madison Square Garden – to make way for a pedestrian entrance on 8th Avenue – advocacy groups are rallying to have the entire complex removed so that the site, above and below ground, can be wholly devoted to Penn Station. In regard to the redevelopment currently being sought, Goshow says he’s heard it all before. An RFP for Penn Station was put out years ago, but it went nowhere. “It’s been talked about for so long, people start to get skeptical,” he says. But this time around, things could be different, Goshow says. Just a few blocks west, at Hudson Yards, the largest private real estate development in US history is unfolding. There, millions of square feet of office, commercial, and residential space are under construction. A forest of towers, public green spaces, and a mix of retail and leisure, Hudson Yards is expected to usher in a new era for the west side of town, and bring a new crush of commuters through Penn Station. “Where you have rail hubs, that’s where you want density,” Goshow says. “I think it will happen. It has to happen. Penn Station is falling apart.”

About Zweig Group

Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.