Billionaire investor Ken Griffin, founder of hedge fund Citadel, is moving forward with a plan to build a 1.8 million-square-foot office tower on New York’s Park Avenue with developers Vornado Realty Trust and Rudin.

The plan that’s set to remake the midtown Manhattan skyline is the latest validation for the corporate headquarters-heavy corridor and for the market, where the office vacancy rate has reached new record highs.

Citadel and affiliate firm Citadel Securities will become anchor tenants at the new 62-story tower at 350 Park Ave., occupying at least 850,000 square feet, New York City Mayor Eric Adams’ office said in a statement. The public-private project includes creating a 12,500-square-foot public concourse and funding for other public improvements.

The tower will be about 1,600 feet tall, a spokesperson for the development team told CoStar News. That would rank it as the city’s second-tallest building, among existing skyscrapers, just after the 1,776-foot-tall One World Trade Center in lower Manhattan.

The development of 350 Park, between East 51st and 52nd streets, will involve the purchase of excess development rights from nearby historic landmarks St. Patrick’s Cathedral and St. Bartholomew’s Church that will contribute a combined $150 million for their upkeep, Adams’ office said.

The city billed the new skyscraper as “a once-in-a-generation office tower” that will be home to more than 6,000 jobs and give a boost to New York’s economic recovery as well as bolster the “ongoing resurgence of midtown Manhattan.”

Citadel also is the anchor tenant at 425 Park Ave., a 47-story, 670,000-square-foot tower between East 55th and 56th streets a few blocks north, and is the first full-block office tower to open on Park Avenue corridor in a half-century. That building recently landed a $911 million refinancing loan.

The tower at 350 Park will “reinforce New York City as the financial capital of the world and Park Avenue as the premier business boulevard,” Steven Roth, Vornado chairman and chief executive, said in the statement.

The project is another example that Park Avenue, hard hit during the pandemic because of its predominantly office-centric nature, has proved naysayers wrong. It has shown solid demand despite what’s often pitched as the live-work-play appeal of neighborhoods such as Midtown South, Lower Manhattan and Hudson Yards.

Park Avenue posted the largest percentage-point drop in supply within midtown in the first quarter, according to a Colliers report, and its lowest availability rate since the first quarter of 2020, at 11%.

A number of addresses in the Park Avenue market commanded top-dollar rents last year as $100-plus per square foot leases hit a record high, a JLL study has found. For instance, One Vanderbilt, owned by Manhattan’s largest office landlord, SL Green Realty, scored the highest rent last year with a $247 per-square-foot lease, according to JLL.

Meanwhile, JPMorgan Chase is building its 1,388-foot, 60-story global headquarters at 270 Park Ave. Developer RXR also plans to co-develop 175 Park Ave., a project billed as a nearly 1,600-foot-tall tower with the highest occupied office floor and the highest hotel in the Western Hemisphere.

“This investment opens a new chapter for Midtown — and closes the book on those who predicted its demise,” New York Deputy Mayor for Operations Meera Joshi said in the statement. “Midtown's revitalization is being led by its public realm — including investments in Fifth Avenue, with the crown jewels of Central Park and Bryant Park at either end.”

The city has said it plans to make midtown Manhattan into a more live-work-play domain.

Roth said in his closely followed annual shareholders letter recently that Park Avenue has an office vacancy rate of under 7%, with rents going for what he described as a range from the mid-$80s to $120s. In contrast, New York’s office vacancy has reached what CoStar data shows as a record high of 14.2%.

“There will always be Park Avenue,” even as an increasing array of occupiers in Manhattan is “tilting to the south and to the west,” Roth said. As “frozen capital markets and sky-high interest rates have and will continue to shut down new builds and tenants’ normal growth, [that] will lead to a very tight New York City office market.”

Meanwhile, Citadel's growth is a sign that the work-from-home and work-from-anywhere trend can only go so far, Roth said in the letter. “Ken tells me that a significant differentiator for his firm is the simple fact that everybody comes to work every day, five days a week (I think they start at 7:30 a.m.),” Roth said. “Companies that embrace work-from-home will be left behind. … It’s absurd to think that years from now, tens of millions of Americans will be working from home, alone at their kitchen table. And that office towers and our great cities will be empty.”

Designed by Pritzker Prize-winning architect Norman Foster’s eponymous firm Foster + Partners, 350 Park will feature floor-to-ceiling glass, landscaped terraces and a stepped configuration. The public concourse on the ground floor of the development along Park Avenue will feature green space, social seating, greater visibility of nearby landmarks, prominent art displays and opportunities for local businesses, according to the city's statement.

“The iconic building will have incredible light, 360-degree views, and spacious layouts in one of the leading financial centers in the world,” Griffin, who also is CEO of Citadel, said in the statement, adding that the property is “the most sought-after address on Park Avenue.”

The project came after Citadel agreed to master lease Vornado’s 585,000-square-foot tower at 350 Park and Rudin’s adjacent 390,000-square-foot property at 40 E. 52nd St. Vornado at the time also entered into a joint venture with Rudin to buy 39 E. 51st St. for $40 million, with plans to combine that property with 350 Park and 40 E. 52nd to create what it described as a “premier development site” for a new major office tower. All three buildings will be torn down, the project’s spokesperson told CoStar News.

The 350 Park project is expected to begin the city’s public review process early next year.