Vornado Realty Trust is signing Manhattan office tenants at rents well above what the same space fetched before. In the third quarter, the New York REIT said, cash rents on 283,000 square feet of re-leased Manhattan office space came in 25.9% above the prior escalated rents, and same-store net operating income rose 9% from a year earlier.
The figures come from Vornado’s third-quarter 2026 earnings release, issued Nov. 2, 2026 and filed with the Securities and Exchange Commission. They also give a landlord’s view of the Manhattan office recovery. Renewal spreads at a portfolio of Vornado’s size show what tenants are now willing to pay for well-located space compared with the leases they signed years ago.
Vornado’s Manhattan office leasing in the third quarter
Vornado leased 489,000 square feet of New York office space in the quarter, 443,000 of it at its ownership share. The average starting rent was $122.96 per square foot and the weighted average lease term was 9.5 years.
The second-generation space, meaning offices that previously had a tenant, is where the pricing shows. On that 283,000 square feet, straight-line GAAP rent averaged $116.95 per square foot, up 37.2% from $85.25 under the previous leases. On a cash basis, starting rents of $119.90 compared with prior escalated rents of $95.25, the 25.9% increase. Tenant improvement allowances and leasing commissions averaged $139.83 per square foot, or $14.72 per square foot for each year of lease term.
Over the first nine months of 2026, Vornado leased 1.148 million square feet of New York office space at an average starting rent of $113.09, and cash rents on re-leased space rose 16.8%.
Its other segments were mixed. Manhattan street retail leasing totaled 37,000 square feet at an average starting rent of $496.83, but cash rents on re-leased retail space fell 15.7%. THE MART in Chicago leased 33,000 square feet with a 7.7% cash increase. At 555 California Street in San Francisco, 55,000 square feet were leased and cash rents rose 38.0%.
Earnings and same-store results
Same-store NOI at Vornado’s share rose 9.0% from the third quarter of 2025, including a 10.2% gain in New York and 4.0% at THE MART. 555 California Street fell 3.4%. On a cash basis, total same-store NOI rose a smaller 3.2% and New York rose 4.9%. The company said the gap mostly reflects GAAP rent starting on new leases that carry free-rent periods.
Cash results were also held down by a lease amendment between Alexander’s and Bloomberg L.P. It gives Bloomberg a rent abatement from April 1 through Dec. 1, 2026, offset by a matching reduction in Bloomberg’s tenant fund. Excluding the abatement, Vornado said, New York same-store cash NOI rose 8.4%.
New York office NOI at Vornado’s share was $189.1 million in the quarter, up from $169.1 million a year earlier. Street retail NOI rose to $49.2 million from $43.8 million. Total revenue was $467.7 million, compared with $453.7 million.
Funds from operations as adjusted, the REIT’s preferred earnings measure, rose to $126.7 million, or $0.65 a diluted share, from $114.5 million, or $0.57. Vornado credited $17.5 million of the gain to rent commencements net of lease expirations and $9.0 million to its June investment in Park Avenue Plaza. Lower interest and investment income took away $9.3 million and higher interest expense $8.7 million. Under GAAP, Vornado lost $47.1 million, or $0.25 a share, compared with net income of $11.6 million, or $0.06, a year earlier.
350 Park, a looming gain and two troubled loans
The fourth quarter will look very different on paper. On Oct. 20, 2026, the Vornado/Rudin venture and an affiliate of Kenneth C. Griffin formed the joint venture that is developing 350 Park Avenue, a roughly 1.9 million-square-foot tower anchored by a 1.05 million-square-foot lease to Citadel Enterprise Americas. The deal closed alongside a $3.3 billion construction loan priced at SOFR plus 3.00% and maturing in October 2032. The site was contributed at a $900 million valuation, and Vornado now holds a 36.1% effective interest.
Because Vornado no longer controls the property, it deconsolidated 350 Park Avenue and 39 East 51st Street. The company said it expects to record an estimated net gain of about $485 million in the fourth quarter. It lists its share of the project budget at $2.134 billion, with stabilization projected for 2030 and an expected unlevered cash yield of 9.2%. Separately, it is redeveloping 623 Fifth Avenue, a 383,000-square-foot project with a $450 million budget aimed at stabilization in 2028.
The release also shows two Manhattan loans that remain unresolved. The mortgage on 825 Seventh Avenue matured unpaid on Oct. 26, 2026, putting it in maturity default. The $244.5 million loan on 888 Seventh Avenue matured unpaid in December 2025, and a forbearance agreement signed March 9, 2026 waives default interest through March 2027.
Vornado bought back no shares in the third quarter. Through nine months it has repurchased 4.53 million shares for $133.3 million, an average of $29.41 each, and $286.6 million remains under its authorization.
On our reading, the quarter supports the view that Manhattan’s best office buildings are regaining pricing power. Vornado’s GAAP loss and its two defaulted or forborne loans show that the recovery is still uneven across the portfolio. Other landlords have reported a similar pickup, including SL Green, which fully leased 245 Park Avenue this year. More deal and earnings coverage is in RealtyWire’s commercial real estate section.
