Port Authority Bus Terminal Redevelopment to Add Office and Retail Space
$10B Project Could Start This Year, Although Funding Is Uncertain
By Mark Hallum February 1, 2024 5:28 pm
reprints
Two office towers and an unknown amount of retail space will come with the redevelopment of Port Authority Bus Terminal.
Those two pieces of the plan were among the revelations at a Thursday press conference by the Port Authority of New York and New Jersey during which agency leaders outlined a $10 billion financing plan and renderings for the rebuild of the 73-year-old facility that it hopes to start this year.
It’s too early to tell how much office or retail space will be available to potential tenants, but Rick Cotton, the executive director of the Port Authority, told reporters that the agency is looking to markets far enough in the future to dodge the distress currently seen in the office market.
“The first buildings that are gonna get built are the station and storage building and the ramps. That’s the next four, four and a half years in front of us,” Cotton said. “The exact design in terms of the retail space, beverage space, and certainly the office buildings, are 10 years away.”
The main terminal will span 2.1 million square feet. Much of the retail space will face outward. and the permanent closure of West 41st Street between Eighth and Ninth avenues will provide more retail within an indoor atrium. A temporary terminal and new ramps are scheduled for completion in 2028 while demolition of the current building is underway.
The new main terminal will be completed in 2032, and crews could break ground before the end of 2024, according to the Port Authority.
“Time has not been kind for Port Authority [bus terminal],” Cotton said during opening remarks. “The bus terminal has become a poster child for failed legacy infrastructure that desperately needs to be replaced.”
Cotton’s speech was followed by words of approval from state Sen. Brad Hoylman-Sigal, Assembly member Tony Simone, City Councilman Erik Bottcher and the chair of Manhattan Community Board 4, Jessica Chait — essentially the majority of the people who would have the power to oppose a plan like this.
The Port Authority plans to spend $10 billion on the rebuild with $1 billion coming from a Federal Transit Administration loan, which has not been granted at this time. An unknown amount of the funding will come from payment in lieu of taxes from whomever is chosen as a partner in the development of the office towers.
A similar funding framework was lined up for the redevelopment of Pennsylvania Station but fell through when Vornado Realty Trust (VNO) decided against further development of the Penn District. Vornado officials cited rising interest rates and inflation impacting the construction of new buildings, plus the softening of the office leasing market.
But Cotton believes a different market and a different neighborhood will make all the difference.
“I would point out to everybody here that there was a sale a week ago on an office building — not a new office building, a standard-issue office building at 56th Street and Fifth Avenue — that sold for three times what the current real estate market predicted,” Cotton said.
Cotton was referring to a slew of sales by Wharton Properties which included the sale of the 115,000-square-foot retail portion of 715-717 Fifth Avenue to Kering, which owns brands Gucci, Balenciaga and Yves Saint Laurent, for $963 million.
Wharton’s Jeff Sutton also made a ton of cabbage selling 724 Fifth Avenue for $425 million and 720 Fifth Avenue for about $397.3 million, both sold to Prada, at the end of December.
Mark Hallum can be reached at mhallum@commercialobserver.com.
