Holliday ‘Confident’ SL Green Will Hit Manhattan Office Leasing Target for 2017
Halfway through the year, city's largest commercial landlord has 940K SF left to reach 1.6M-SF guidance
SL Green Realty Corp. remains “pretty confident” that it will reach its 1.6-million-square-foot Manhattan office leasing guidance for 2017, according to Marc Holliday, the real estate investment trust’s chief executive officer, despite SL Green still having nearly 940,000 square feet of leasing left to hit its target.
SL Green signed 45 Manhattan office leases for 314,399 square feet of space in the second quarter of this year, the REIT said in its quarterly earnings report released last night. That figure took the company’s year-to-date Manhattan office leasing figures, at the halfway point of the year, to 89 deals totalling 660,744 square feet.
While the company would need to sign another 900,000-plus square feet of Manhattan office leases in the last six months of 2017 to hit its previously forecast, 1.6-million-square-foot target for the year, Holliday expressed confidence on SL Green’s earnings call this afternoon that the REIT will be able to do just that.
He pointed to SL Green’s current 1-million-square-foot Manhattan office leasing pipeline, noting that “over half” of that figure is comprised of leases that are either “out for signature” or currently being negotiated.
Holliday also cited a strong office-using economy and robust New York City economy at large, with office-using employment in New York up by 20,000 jobs through the first five months of this year and the citywide unemployment rate at a “record-low” 4.3 percent.
Responding to an analyst question on the earnings call about how realistically SL Green can expect to reach the 1.6-million-square-foot estimate, Holliday said: “You should assume we’ve already signed some between [the end of the second quarter on June 30] and today.”
“We think we’ll get there… We usually don’t miss, we usually overachieve,” he added. “Between July and December, we’ll have new deals that aren’t even yet on our pipeline… We think we’ll hit our [1.6 million square feet].”
Steven Durels, SL Green’s executive vice president and director of leasing and real property, noted on the call that the company’s leasing pipeline changes and fluctuates, often within a short span of time. “Everybody gets surprised because, literally in a 10-day period, the numbers can change, and frequently to the positive,” he said.
Durels also played down “mixed reports out there from the brokerage community” regarding the state of the city’s office leasing market, which have dampened sentiment around the market and “betray[ed] reality a little bit.”
“I think the pipeline we got says it all,” he said, describing SL Green’s 1 million square feet of deals in the works as “representative of the strength of the overall market.”
“Tenants are migrating to new and redeveloped product; [we] think that’s a good thing,” Durels added, citing new construction and robust leasing activity in Hudson Yards and the Downtown office market as examples. “Manhattan has been starved for new [office] construction for many years.”
He pointed to the “increased number of tenant presentations and request-for-proposals that we’re experiencing at One Vanderbilt,” the REIT’s massive 58-story, 1.6-million-square-foot office tower currently being developed next to Grand Central Terminal in Midtown East, as a testament to the current state of the market.
Among the second-quarter office leases that SL Green disclosed in its earnings report was marketing research firm Schlesinger Associates’ 17,587-square-foot deal for the entire ninth floor at the 20-story, 500,000-square-foot 711 Third Avenue, which Commercial Observer first reported Tuesday.