tremendous vibrancy of Times Square .
Another relevant example of the concepts of principle of change , and highest and best economic use , is The Hotel Pennsylvania . The hotel was located across from Madison Square Garden and permanently closed its doors on April 1st , 2020 , a victim of the global pandemic . For more than 25 years , Vornado , owner of the 1,700-room hotel , has been desirous to redevelop the site located at 401 Seventh Avenue .
The notion of the Hotel Pennsylvania ’ s demolition was first introduced in 1997 when VNO acquired the property . It announced again in 2007 that the hotel would be demolished to make way for 15 Penn Plaza , a new office building with Merrill Lynch & Company as its anchor tenant . While the efforts of preservation activists to save the nearly century-old hotel initially provided a challenge to the proposed project , it was the Great Recession , which began in December 2007 and ultimately led to Merrill Lynch ’ s insolvency and subsequent sale to Bank of America , that put a full stop to the project .
While in 2007 the highest and best use of the Hotel Pennsylvania site appeared to be razing the structure and constructing a brand-new office tower , just one year later the global financial crisis rendered the economic feasibility of that proposed development untenable and halted the project .
A 2010 vote by the New York City Council approving construction of 15 Penn Plaza , a more than 2-million-square-foot office building on the site of the Hotel Pennsylvania , was perceived at the time as most likely the final chapter of this storied hotel ’ s economic life . But , during late 2011 , weak market conditions resulted in a delay of the structure ’ s demolition , and by 2013 , the plan was entirely abandoned . Although VNO shortly thereafter announced a renovation of the hotel in 2018 , its special permits regarding the proposed redevelopment with the NYC Planning Commission were renewed . During a Q1 2020 earnings call , Steven Roth , the founder and chairman of VNO , referred to the Hotel Pennsylvania as “ a parking lot for a development site ” and further stated , “ we have thought internally about using this and just never reopening it .”
During 2008 , the interim highest and best use of the property evolved to the continued use of the site as a functionally and physically obsolete hotel until such time when a proposed redevelopment of the site again became financially viable . When the Hotel Pennsylvania closed in 2020 , the property was run down , and the New York hotel market outlook was bleak . The opportunity to use the closure to finally achieve VNO ’ s long-term vision to redevelop the prime site became obvious and demolition of the hotel , which commenced in January 2022 , was completed in October 2023 .
VNO ’ s most recent plan is to develop the site now being referred to as PENN 15 with a 56-story commercial 1,200-foottall skyscraper that will yield 2.7 million square feet of office space and stand as the centerpiece of the surrounding 18 millionsquare-foot Penn District master plan . Currently , the paradigm shifts in work from office , coupled with the recent dramatic and swift rise of interest rates , along with tight capital markets , are hindering economic feasibility to break ground . When the development pause ends , it will be interesting to see how much office space is ultimately built and whether the project will pivot to a mixed-use development .
The 45-story New York Marriott Marquis looms large over Times Square .