I would image that since the property was sold it wasn't PRR's right to do anything about it if they wanted to. The new owners didn't care.
There is a very detailed photo's of the tear down and how much was lost. I don't know where the links are for the video and or pictures of it. But it was the last straw for many and lead to the historic preservation movement to prevent such a tragedy. I just don't remember who documented this.
Jamie