ESRT Closes Q3 2025 With Strong Fundamentals But Muted Leasing Numbers

Empire State Realty Trust (ESRT) reported an increase in visitors to its eponymous building, along with fewer leases in the third quarter of 2025 as its portfolio reaches critical capacity.

Net operating income from the observatory at the Empire State Building saw a modest increase to $26.5 million — up slightly compared to $24.1 million on a quarter-over-quarter basis — but it still hasn’t reached the $28.5 million recorded in the fourth quarter of 2024, the real estate investment trust said Thursday.

The decrease in visitations has been attributed to tourism being negatively impacted by international politics, according to ESRT.

Leasing velocity across its entire portfolio, both retail and office, was down from 232,108 square feet in the second quarter to 87,880 square feet in the quarter ending Sept. 30. ESRT explained to investors during an earnings call that the drop was due to its available spaces reaching capacity.

In the third quarter, ESRT’s notable lease deals included a 19,883-square-foot renewal and expansion for Jencap Group at 1350 Broadway, and a 16,402-square-foot renewal for Haver Analytics at One Grand Central Place.

Occupancy increased 80 basis points to 90.3 percent across its Manhattan portfolio. ESRT reported 150,000 square feet of leases currently in negotiation, and 500,000 square feet of Manhattan office vacancies.

“We have less space to lease, and a portion of our Manhattan office vacancy is held off-market in connection with our assemblage of large block opportunities at several properties in response to market demand, which will provide strong long-term results,” an ESRT spokesperson said.

ESRT’s portfolio is optimized to protect against possible market contraction through layoffs at big companies like Amazon — which just cut its headcount by 14,000 people — according to ESRT Chairman Tony Malkin, who emphasized that he is in talks with enough potential new tenants that he does not see the job market being an immediate cause of concern.

“Everybody we speak with comes to us for the quality of our portfolio, and several of them have migrated from what would be thought of as glass and steel buildings,” Malkin said. “We still have ongoing expansion within our portfolio from existing tenants. There are all kinds of reasons people might not expand, but we don’t see any of them playing out right now.”

Funds from operations was 23 cents per diluted share compared to 26 cents in the third quarter of 2024, which equates to about $61.2 million compared to $69.2 million, respectively, over the same periods.

Malkin reiterated his agnostic stance on politics, specifically in terms of how leasing could be impacted by the presumptive victory of Zohran Mamdani in the Nov. 4 mayoral election.

“We do policy, not politics,” Malkin said. “So whoever shows up, whatever administration arrives, that’s the one with which we deal, and that’s where we try to both contribute to policy and do our best work from a business perspective.”

But in a more direct address to the question of whether the market is vulnerable to policies from a Democratic Socialist mayor, Malkin said he is confident that the New York City market will continue to be what it has always been to people looking to build a business and a career.

“New York City has and continues to be a magnet for the job-seeking college graduates, folks who want to come and make their careers and live in a vibrant environment,” Malkin said. “And by the way, those are an awful lot of today’s voters. They are the employees. The employers are here because they want those employees.”

Mark Hallum can be reached at mhallum@commercialobserver.com.