Vornado Realty Trust (VNO) presented its market outlook at the BofA NY Global Real Estate Conference 2026, highlighting the strength of the New York City real estate market. The company owns approximately 28 million square feet of real estate, with a portfolio that includes Class A trophy, Class A, and new trophy properties totaling about 180 million square feet, and an overall vacancy rate of about 6%. The upper-floor tower vacancy is estimated at 3% to 4%.
Large tenants with lease expirations spanning 2029 to 2031 are seeking extensions 3 to 5 years early. Vornado's new supply pipeline is projected to deliver roughly one building a year from 2029 through 2033, with new supply pipeline buildings at least 50% pre-leased.
Vornado's Penn District rents are running into the $120s per square foot, more than double the $60 to $65 per square foot achieved in early development phases. The 1290 Sixth Avenue rents are in the $90s per square foot on lower floors, including a deal at $97 per square foot on the sixth floor. The 350 Park Avenue target rents are marketed with a '350 at 350' message, targeting $350 per square foot. Comparable deals have been done in the $300s and some in the upper $300s per square foot. New supply overall needs rents above $250 per square foot to work economically, with top floors reaching $350 to $400 or more.
Street retail rents in Times Square corner are $1,500 to $2,000 per square foot, and Fifth Avenue rents are $2,500 to $3,500 per square foot. Annual retail rent growth is 2.5% to 3%. Net effective rents are rising in the high single digits to around 10%.
Vornado acquired a 49% to 50% joint venture interest in Park Avenue Plaza, with current building rents 40% to 50% below market, and an 11-year lease term. The company plans to sell a 25% interest in the 350 Park Avenue venture while keeping a meaningful stake.
Citadel's space commitment grew to 1.05 million square feet, an increase of 200,000 square feet from the original 850,000 square feet. The speculative office block runs from floors 28 to 56, featuring 26,000-square-foot floor plates and 16-foot ceilings. Penn One leased more than 200,000 square feet, and Penn Two signed about 60,000 to 70,000 square feet. Over 600,000 square feet were leased off the 1290 redevelopment project.
Vornado's stock closed at $35.01, down 1.21% or -$0.43. The company has a debt-to-equity ratio of 1.78, and a dividend yield of 2.11%, maintaining dividend payments for 36 consecutive years. InvestingPro rated Vornado's financial health as 'FAIR'.
Glen, an executive at Vornado, stated, 'It's a landlord's market, period. It's just clear at this point.' Michael, the CEO, noted that 'You have tight vacancy, you have strong demand. Rents are rising. There is limited new supply, and it is extremely hard to build in this city, both from a cost standpoint, from a time standpoint.'
Ken Griffin, founder of Citadel, was quoted by Michael as saying, 'My business is going to be here a lot longer than any administration.' Michael summarized Vornado's position as 'As optimistic and well-positioned as we've ever been...'
