Vornado Realty Trust Sees Bright Future in New York Real Estate Market
Vornado Realty Trust recently reported its fourth quarter earnings for 2024, showcasing a thriving business landscape. Chairman and Chief Executive Officer Steven Roth highlighted the strength of the New York real estate market, stating that it is 'America's World City' with an irreplaceable human and physical capital. The company competes in a narrower market, approximately 188 million square feet of high-quality space, where availability is dwindling rapidly, standing at just 10.7% compared to 20.1% in the lower-tiered market.
Roth noted that new building supply has been stagnant for five years and takes around 5-7 years to deliver once started. This scarcity creates a landlord-friendly environment, with expected rents to rise aggressively or even spike. In fact, Roth mentioned that rents have already begun to increase.
The company's stock price increased by 49% in 2024 after a 35% rise in 2023. Vornado leased 3.4 million square feet overall, including 2.65 million square feet of New York office space at market-leading $104 starting rents with mark-to-markets of 2.5% cash and 10.9% GAAP.
Vornado completed the most premium $100 plus deals in New York for the second consecutive year, executing 18 transactions for 1.36 million square feet. The company also finished three of the top 10 largest office deals in the city. Notably, Vornado successfully leased 285,000 square feet at [ 10-1 ] at a starting rent of $98, exceeding their underwriting expectations.
Additionally, Vornado completed 25 retail leases totaling 187,000 square feet, including Manhattan's first prime wire in the Penn District. The company sold Uniqlo's space at 666 Fifth Avenue for a record price of $20,000 per square foot and repaid its $450 million unsecured bonds and $108 million credit lines without any issues.
The company's entire portfolio achieved LEED certification, marking a significant milestone. Notably, Vornado is nearing completion on several crucial deals, including the master lease at 770 Broadway with NYU, which will remove $700 million in debt from their balance sheet and eliminate approximately 500,000 square feet of vacancy.
