Steve Roth was never a fan of people working in their pajamas.
Over the last few years, Roth has repeatedly said during his company’s earnings calls that working from the kitchen table was not the future.
On Tuesday, during Vornado Realty Trust’s fourth quarter earnings call, he called remote work a “scare” and said “most have left their kitchen tables and are back at the office.”
Of course, he is mostly focused on what he calls the “better space market,” high-end office space in Manhattan. The recovery of the city’s office market is lopsided, skewed toward these properties. As a recent JLL report noted, “landlords of older buildings may need to consider significant renovations or conversions to remain competitive.”
The office availability rate in Manhattan hit 17.9 percent in the fourth quarter of 2024, the lowest level seen since 2020, according to Avison Young. In the fourth quarter, 35.9 million square feet of office space was leased, 17.2 percent more than the same time in 2023. Class-A office space made up the largest share at 38.9 percent.
While demand for this space is back up, developers aren’t clamoring to build more of it. Roth pointed to high interest rates and lack of available capital, as well as the unknown added construction costs resulting from tariffs on steel. Citadel’s Ken Griffin reportedly called the tariffs a “huge mistake” on Tuesday.
Tuesday’s call was a bit of a rollercoaster in terms of discussion around the future of the Hotel Penn site. Roth said that the office project planned there would be the next site to be developed in the Penn District, but then also acknowledged that the financials around ground-up development are still prohibitive. He didn’t mention temporary plans for the site (such as tennis courts) but did say Vornado is considering all options. Whether that includes temporary uses for the site, in addition to the ultimate mix of the building, was not immediately clear.
He even predicted the tower planned for 350 Park Avenue will be the only major office tower to break ground over the next few years (demolition of the existing office building is expected to begin next year). We shall see!
What we’re thinking about: The Justice Department has directed prosecutors in Manhattan to drop criminal charges against Mayor Eric Adams. On Tuesday, in a live-streamed speech, the mayor remained defiant and said that he “never broke the law, and I never would” and said the last 15 months represented the most difficult time in his life. He also said that he knows that “many New Yorkers will still question my character” and that he “must continue to regain your trust.” Has the Justice Department’s decision affected how you will vote in the mayoral election? Were you planning to vote for Adams regardless of the charges, or were you considering your options? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: Billionaire John Catsimatidis was apparently the one to break the news to the mayor that the DOJ had ordered prosecutors to drop the criminal case against him, according to Politico New York. Adams was at a party Monday night hosted by Catsimatidis.
“We went off to the corner to have a diet coke and talk a little. And I get the breaking news on my phone and I turned the phone and I showed it to him,” Catsimatidis told Politico. “And you could see in his face, he had an ‘oh crap’ moment.”
Elsewhere in New York…
— The Federal Emergency Management Agency fired four employees for “circumventing leadership” to reimburse NYC for “luxury hotels” for migrants, Gothamist reports. City Hall has said that the funds were appropriated by Congress under the Biden administration and that the city does not pay “luxury” rates.
—ICYMI: Before news broke that the DOJ ordered prosecutors to drop their case against Mayor Eric Adams, the mayor told his top commissioners not to criticize President Donald Trump, the City reports.
— Gov. Kathy Hochul will head to Washington next week to make her case that congestion pricing should be kept in place, WABC reports. Trump has indicated that he may revoke federal approval of the program.
Closing Time
Residential: The priciest residential sale Tuesday was $30.9 million for a 4,216-square-foot, sponsor-sale condominium unit at 760 Madison Ave in Lenox Hill. Sabrina Saltiel and Madeline Hult Elghanayan of Douglas Elliman had the listing.
Commercial: The most expensive commercial closing of the day was $1.85 million for a six-unit apartment building at 349 21st Street in Greenwood.
New to the Market: The highest price for a residential property hitting the market was $26.9 million for a 4,853-square-foot, sponsor-sale condo unit at 211 West 84th Street, The Henry, on the Upper West Side. Alexa Lambert at Compass has the listing.Breaking Ground: The largest new building application filed was for a 50,651-square-foot, 75 -unit, residential building at 343 Himrod Street in Bushwick. Nataliya Donskoy of ND Architecture & Design filed the permit on behalf of Landau Cheskal.
— Matthew Elo