Vornado Realty Trust said it could charge up to $350 per square foot for space in its new 350 Park Avenue office tower, a rate that aligns with recent rents at other high‑profile Manhattan properties.
Leasing outlook amid tight supply
The announcement came during Vornado’s second‑quarter earnings call, where Chairman Steven Roth addressed investor questions about the proposed rent. When asked whether the $350 figure reflected the starting ask, he confirmed it was accurate.
Roth noted that scarcity of new supply, combined with construction costs and interest rates, requires a very high rent for a new building. This pressure will push older, well‑located buildings to raise their rates, reinforcing demand for the new tower.
Vornado is developing 350 Park Avenue alongside partners Ken Griffin’s Citadel and Rudin. Construction began at the end of 2025, with plans for about 1.85 million square feet of office space. The building targets Class A tenants, a segment that has seen rents exceeding $300 per square foot at comparable “trophy” locations.
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Financial results and broader market context
In the quarter ending June 30, Vornado reported net income of $16.4 million, a sharp decline from $743.8 million a year earlier. The drop reflects a large master lease transaction involving 770 Broadway and New York University, valued at $803.2 million.
Despite the earnings dip, funds from operations rose to $144 million from $120.9 million a year ago, and revenue increased to $462.2 million from $441.4 million. The company also leased roughly 348,000 square feet of office space and 61,000 square feet of retail during the quarter.
Occupancy rates remain high across the portfolio: overall 90.8 percent, office assets at 92.2 percent, and retail properties at 77.8 percent. Roth highlighted pending lease deals totaling 67,000 square feet in the Penn District, expecting those to close and push occupancy toward full capacity.
Limited inventory of new office towers has contributed to rising rents.
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Developers face higher construction costs and financing rates, which translate into higher lease prices for tenants seeking premium locations.
From a broader perspective, the $350‑per‑square‑foot target signals confidence that demand for premium office space will persist despite economic headwinds. Investors and landlords see limited new supply as a lever to sustain or increase rates, especially in Manhattan’s core business districts where companies value proximity and prestige.
Roth’s comments suggest that Vornado believes the new tower will attract tenants even at the upper end of the price range, citing the lack of supply and strong demand as key factors. The company’s strategy aligns with its recent acquisition of Park Avenue Plaza, an older asset expected to benefit from the same market forces.
While the high rent figure may deter some prospective lessees, the firm’s strong occupancy levels and robust FFO growth indicate that its overall portfolio remains resilient. The upcoming completion of 350 Park Avenue will add another high‑grade office option to a market where space is increasingly scarce.
