- Vornado Realty Trust is investing $350Mn to build a 475-unit apartment tower at 484 Eighth Avenue, directly across from Penn Station, in a pivot toward residential development.
- The project will utilize New York’s 485x tax incentive, which provides benefits for developments that include affordable housing. However, the number of income-restricted units has not been disclosed.
- This move signals a strategic shift for Vornado, traditionally a Midtown office giant, as CEO Steven Roth responds to New York’s housing shortage and considers offloading trophy office assets in Chicago and San Francisco.
A Shift In Strategy
Vornado Realty Trust is taking a decisive turn from its office-centric identity, reports The Real Deal. The company plans to develop a $350M, 475-unit rental tower. The project will rise at the northeast corner of West 34th Street and Eighth Avenue. The announcement comes from President Michael Franco as the REIT accelerates its transition toward residential amid shifting market conditions.
Making Use Of 485x
The planned tower will rely on the state’s newly enacted 485x tax incentive, designed to boost affordable housing. While Vornado confirmed it will participate in the program, the exact number of affordable units remains unclear. The incentive replaces the expired 421a program and has become a key tool for developers navigating the city’s housing shortage.
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Penn District Reimagined
The tower is part of Vornado’s long-term vision to redevelop the Penn District—a vision that faced delays during the pandemic. The company has already invested $1.2B into modernizing the nearby Penn 1 and Penn 2 office buildings. It also recently proposed a pedestrian bridge connecting the two towers. That plan drew criticism for potentially obstructing views of the Empire State Building.
Not Vornado’s First Residential Play
Though primarily known for its 20M SF of office holdings, Vornado has made selective residential investments in the past. These include the ultra-luxury 220 Central Park South and Tribeca’s Independence Plaza. However, the 484 Eighth Avenue development represents one of its boldest residential commitments to date.
Selling Off The Old Guard
The move into multifamily also coincides with Vornado exploring the sale of key office assets. These include the Merchandise Mart in Chicago and its stake in San Francisco’s 555 California, which is co-owned with the Trump Organization. These potential exits would mark a deeper shift away from its traditional office holdings.
Why It Matters
Vornado’s project reflects a broader trend among office landlords reconsidering their portfolios in the wake of remote work and high office vacancy rates. As demand for residential space surges, developers like Vornado are repositioning for long-term value. This is especially true in cities like New York, where housing shortages persist.
What’s Next
The 484 Eighth Avenue tower is still in its early planning stages, but its progress will be closely watched as a test case for 485x and as a bellwether of Vornado’s broader strategic pivot. With pressure mounting to deliver housing rather than commercial glass towers, this could be the first of several residential bets from a REIT long defined by Midtown office dominance.
