If You Work in a Vornado Building, You Should Read This…

If You Work in a Vornado Building, You Should Read This…

Vornado Realty Trust (VNO) hosted their Q4 earnings call this morning. While there were many interesting remarks, I’d like to highlight a handful of observations with particular relevance to office tenants within the portfolio.

As I’ve argued in the past in this forum, the market seems destined to strengthen in its tenant-friendly bias for the near term and VNO’s portfolio is no exception.

  • Foreign capital is nearly 40% of commercial real estate sales activity in NYC. This suggests some vulnerability should the dollar experience a pullback.
  • Weighted average of annual rent of expiring office leases in NYC is $74.16 in 2018. This implies a strength that current market fundamentals seem to belie.
  • Over 1.1 msf of office leases are slated to expire in 2018 (vs. only 489 ksf in 2017)
  • NYC sales volume fell in 2016; VNO made no real estate purchases last year

Furthermore, as illustrated by the following charts, total and NYC property revenue and operating income in Q4 was down versus last year.

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