The desire to reuse old caissons (from previous tunneling attempts) when building the H&M system meant that the tubes at this location would be located far inland. As a result, the actual station was not closely integrated into the Erie Railroad Terminal above, and the Erie never got around to building a new terminal on top of the underground platforms. Therefore, a lengthy walk through inclined pedestrian tunnels was necessary in order to connect from the H&M to the passenger trains. In response to this, the Hudson and Manhattan Railroad installed in 1954 a long moving sidewalk known as "the Speedwalk". It was the first such moving walkway built in the United States if not the world; built by Goodyear, it moved up a 10 percent grade at a speed of 1.5 mph (2.4 km/h). The walkway was closed within a decade due to significant changes happening above ground. It remained in place until the mid-1990s when the station was completely refurbished in response to the new office and commercial development in the area.
In 1956, the Erie Railroad consolidated their operations with the Lackawanna Railroad and moved to their terminal in Hoboken. A few years later, the small New York, Susquehanna and Western Railway ceased their operations at the Erie Terminal, which was torn down soon afterwards. Without any reason to disembark other than some informal parking lots, ridership at the Erie tube station declined sharply. For nearly 30 years, the station served primarily as a transfer station from one PATH line to another, and was totally closed on evenings and weekends. (At the former World Trade Center station, it was still possible in 2001 to see the abandoned electronic board that indicated with a light whether the Pavonia Station stop was in service or not.)
Beginning in the late 1980s the once-vacant railyards surrounding the station were turned into residential, office, and retail towers, and the neighborhood would later become known as Newport. As part of the redevelopment, Pavonia Station itself was renamed and underwent extensive renovations, including improved lighting, floors, walls, ceilings, artwork, and the installation of a new headhouse with escalators and elevators. The station underwent further renovations in 2001-2003 with the installation of an additional elevator in order to re-open the side platform to regular use after four decades of inactivity.
The open steelwork beside the headhouse is the skeleton for a never-built second level that was to connect to office towers across the street via a skywalk, similar to those at the Gateway complex at Newark Penn Station.
The Port Authority is currently considering whether to fund a long-proposed second entry to the station on the west side of Washington Boulevard to ease congestion.
A third name change may also be in the station's future, given that this isolated section of Pavonia Avenue has been renamed to Town Square Place. (This was done to avoid confusion with three other sections of Pavonia Avenue elsewhere in Jersey City.)