Steven Roth

Steven Roth betrayed the tiniest bit of irritation earlier this year when he pinned the latest delay in bringing his dreams for the Pennsylvania Station district to fruition on “frozen capital markets.”

Vornado Realty Trust’s leader is clearly tired of waiting.

The largely New York-centric firm has reported declining occupancy for five years in a row across its 20.4 million-square-foot Manhattan office portfolio, dropping from 97.2 percent in 2018 to 90.7 percent in 2023 despite signing 2.1 million square feet of office deals in New York. And that figure inched lower to 89.3 percent at the end of the first quarter of 2024.

The site of the former Pennsylvania Hotel on Seventh Avenue was supposed to be well on its way to becoming a 2.8 million-square-foot office tower by now, but instead the Midtown demolition zone awaits an unknown future. In the interim, Vornado is shopping it around to tenants interested in temporary uses like tennis courts or fashion shows.

But there are bright spots for Vornado, and that includes Penn 2 directly across Seventh Avenue, where a space-age addition called The Bustle is nearing completion. The real estate investment trust recently hired Cushman & Wakefield to start leasing up the renovated office tower, and Major League Soccer already said it’s ready to play ball.

The professional sports league signed for 126,000 square feet at Penn 2 in March 2024. Three months earlier, the firm landed another big office lease at 280 Park Avenue — which it co-owns with SL Green — when investment bank PJT Partners expanded to 270,000 square feet at the 43-story tower.

But that news was quickly neutralized when it leaked in February that Facebook parent Meta was shrinking its footprint by 275,000 square feet at Vornado’s landmarked 770 Broadway.

And it sent a shudder through the office market when the $1.1 billion commercial mortgage-backed securities loan tied to 280 Park hit special servicing this year. Vornado and SL Green managed to extend it by two years to 2026.

Will Manhattan’s second-biggest office landlord weather the storm?

“We believe in-office work is the better bet,” Roth wrote to shareholders this year. “Given a little time, frozen capital markets and no new supply will restore the supply-demand balance and restore value to office. Lower interest rates, when they finally come, will be the icing on the value-creation cake.”