The New School near Union Square is planning a significant expansion that would turn a low rise building on Fifth Avenue into a 12 to 16 floor vertical campus to meet its growing student population.

Its current building on the southeast corner of 14th Street and Fifth Avenue will be torn down, as soon as June, 2008, and replaced. While plans and cost estimates are still preliminary, the school may finance the new building with about $160 million made up of gifts and external financing.

In an interview, the president of the New School, Robert Kerrey, said the school needs more room. “The short answer is we’re growing and need space.” He said the building is part of their desire give better space to students so that more collaboration could occur across disciplines in the liberal arts, design, and social science. Mr. Kerrey said the new building could contain a new theater, preferably a performance space that could serve many uses from jazz concerts to public lectures. The building may also have a small dance studio or athletic area.

The school now has about 5,000 undergraduates, 4,000 graduates, and roughly 12,000 non-degree continuing education students.

“You need places for students to congregate and exchange information and enjoy each other,” a spokeswoman for the New School on this project, Jane Crotty, said. Roger Duffy of Skidmore, Owings & Merrill is the architect on the project.

The school has met with elected officials, the borough president, and the chair of the community board, to get input. A State Senator, Thomas Duane, said, “The best thing they could do, they’ve done: which is early consultation with the community.” The school could have a public presentation this fall, Ms. Crotty said.

One of the reasons the school is growing is the desirability of Union Square. Citing a reduction in crime and improvement in municipal services in Manhattan, Mr. Kerrey said the area is safer.

The executive director of the Union Square Partnership, Jennifer Falk, said the 14th Street corridor has seen a lot of growth recently, particularly at the southern end of Union Square Park. She said that there is a lot of private investment, particularly ground floor retail both east and west of the park. “We believe that the new facility at the New School will just further spur that growth even farther west,” she said.

Ms. Falk said that over the past decade, the number of subway riders to and from Union Square has more than doubled. “The neighborhood is seen as a destination,” she said.

The director of the Center for Urban Research at the CUNY Graduate Center, John Mollenkopf, said over many years Union Square moved from a somewhat derelict area to a thriving area.

But Mr. Kerrey said the area’s desirability poses a challenge because of the higher cost of living for things such as student housing.

Mr. Mollenkopf said that over time, higher education has been a fairly steady growth industry in New York City. New York University has expanded rapidly in the eastern part of Union Square in the last decade. A professor at Cooper Union, Fred Siegel, said that universities, which “are rooted in a locale” play an important part in urban revivals, and in the case of New York, its ongoing economic expansion.

In 1967, the New School acquired 65 Fifth Avenue, which had previously been Lanes Department store. The school opened in February 1969. Escalators from the store are still in the building.

Mr. Kerrey said he hopes the building will have a science lab. If so, it will mark a return to a previous time when the building was connected to science. Thomas Edison had his headquarters in the building in the early 1880s.