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.

Questions? Comment below or email me at [email protected]