Vornado Realty Trust (NYSE:VNO) reported second-quarter comparable funds from operations of $0.67 per share, up from $0.56 a year earlier, as lease commencements at its PENN District properties, stronger signage revenue and improved New York operations contributed to results.
Chairman and Chief Executive Officer Steven Roth said the company exceeded analyst consensus by $0.10 per share and described Manhattan office conditions as increasingly favorable to landlords. He pointed to strong leasing activity, declining availability of large office blocks and limited future supply in the market.
New York Leasing and Occupancy
During the first half of 2026, Vornado leased 978,000 square feet across its portfolio. Manhattan office leasing totaled 659,000 square feet at average starting rents of $105 per square foot, with positive mark-to-market changes of 9.5% on a GAAP basis and 7.1% on a cash basis.
In the second quarter, the company completed 29 Manhattan office leases covering 328,000 square feet at average starting rents of $107 per square foot. Leasing included 181,000 square feet in the PENN District and 167,000 square feet in Vornado’s other Manhattan properties.
Roth said PENN 2 had 67,000 square feet of leases out for signature and that management expects the property to be “fully leased here down to dribs and drabs by year-end.” At PENN 1, the company had 246,000 square feet of leases out for signature at an average mark-to-market increase of 44%.
President and Chief Financial Officer Michael Franco said New York office occupancy rose 60 basis points from the prior quarter to 92.2%, compared with a trough of 84.4% in the first quarter of 2025. The company expects occupancy to exceed 93% by year-end, with further gains thereafter.
Vornado’s New York office pipeline included more than 2.2 million square feet of leases under negotiation at various stages, including Citadel’s planned 1 million-square-foot lease at 350 Park Avenue and more than 500,000 square feet in the PENN District.
Franco said physical office occupancy has historically operated in the 95% to 96% range. Economic occupancy, however, remains lower because of signed leases that have not yet commenced. Roth said the company has approximately $180 million of revenue from signed but not-yet-commenced leases, representing more than $150 million of FFO.
Operating Results and Outlook
Franco attributed the year-over-year increase in comparable FFO primarily to lease commencements at PENN 1 and PENN 2, the prior-year impact of the NYU master lease at 770 Broadway, and higher signage revenue. Higher net interest expense partially offset those gains.
New York office same-store net operating income rose 13.7% on a GAAP basis and 11.9% on a cash basis. New York retail same-store NOI increased 7.3% on a GAAP basis and 5.7% on a cash basis. Across the company’s New York business, same-store NOI was up 11.9% on a GAAP basis and 6.2% on a cash basis.
Management said it now expects full-year 2026 comparable FFO to exceed 2025 levels, with the second-quarter result serving as a “decent average run rate” for the remainder of the year. Franco also said the company continues to anticipate significant earnings growth in 2027 as leases commence at PENN 1, PENN 2 and other vacant space, and as the Park Avenue Plaza acquisition contributes.
Discussing tenant-improvement costs and concessions, Executive Vice President of Office Leasing and Co-Head of Real Estate Glen Weiss said rents are rising while concessions are tightening. “Free rents [are] coming down, and we’re now seeing tightening on the TIs,” Weiss said.
Park Avenue Investments and Development
Roth highlighted Vornado’s recent investments in 623 Fifth Avenue and Park Avenue Plaza. The company is redeveloping the 383,000-square-foot 623 Fifth Avenue property, located above Saks Fifth Avenue, into boutique office space. Roth said Vornado was preparing to execute its first lease at the building, covering two floors for a financial-services firm at rents consistent with underwriting, while early demand supported higher asking rents.
Vornado also acquired a half interest in Park Avenue Plaza alongside Fisher Brothers. Roth said the 1.2 million-square-foot tower was valued at $950 per square foot in the transaction and has a 2.9% in-place mortgage with six years remaining. He said existing leases at the building are approximately half of current market rents.
The company also plans to exercise its option to increase its interest in the 350 Park Avenue development to 36%. The project includes Ken Griffin as a 60% partner and Citadel as its 1 million-square-foot anchor tenant. Roth said a joint-venture closing is expected in September.
Franco said Vornado’s incremental capital requirements for the project are expected to be in the range of $300 million to $350 million over time, with meaningful contributions not expected until 2029 or later. The partnership has arranged a $3.3 billion construction loan, according to Roth.
Management said the partnership is also considering selling a 25% interest in the project to high-net-worth family offices through a club-style investment structure.
Liquidity, Asset Sales and Buybacks
Vornado ended the quarter with $2 billion of liquidity, consisting of $789 million of cash and $1.2 billion of undrawn credit lines. Management said it is in discussions to sell two non-essential assets, with one characterized as non-core and the other as an asset where the company could crystallize private-market value.
Roth said proceeds from potential sales would strengthen the company’s liquidity while preserving dry powder for acquisitions and other investments. He added that the company intends to maintain a strong balance sheet in preparation for future market downturns.
During the quarter, Vornado repurchased 1.8 million shares at an average price of $29.92 per share. Since beginning its buyback program in 2023, the company has repurchased 8 million shares at an average price of $26.61 per share.
Vornado’s signage business in Times Square and the PENN District continued to grow, with Roth describing it as a capital-light business that has increased at roughly 5% annually. Franco said both pricing and volume have contributed to growth as the company uses digital signage to optimize advertising inventory.
About Vornado Realty Trust (NYSE:VNO)
Vornado Realty Trust is a self‐administered real estate investment trust focused on the ownership, management and redevelopment of office and retail properties. As a fully integrated REIT, the company oversees leasing, property management, building operations and strategic capital improvements designed to enhance asset value and tenant experience. Vornado’s business model emphasizes long‐term cash flow generation through stable rental income and disciplined portfolio optimization.
The company’s core portfolio is concentrated in New York City, where it holds a diverse mix of office towers and street‐level retail assets in prominent submarkets such as Midtown and the Penn Plaza corridor.
