Declining Empire State Building Visits Drive Q2 Loss for ESRT

New York City’s declines in international tourism over the past year since President Donald Trump assumed office are starting to affect Empire State Realty Trust (ESRT)’s finances.

The real estate investment trust (REIT) reported second-quarter funds from operations (FFO) of $57 million, or 21 cents per share, marking a loss of $25.8 million or 15 cents per share from the same period a year ago. ESRT attributed the loss largely to a “massive” non-cash impairment charge of $166.11 million connected to underperforming visitations in the Empire State Building observatory stemming from persistent drops in international tourists to the Big Apple.

The observatory generated $12.4 million of net income in the first quarter, a sharp 48.5 percent decrease from $24.1 million in the same period in 2025. Visitors to the observatory during the quarter were 450,000, down 28.5 percent year-over-year.

In addition to the decline of international visitors to the U.S., ESRT also attributed the profit loss to lower usage of third-party pass program channels used for tourist sites around New York. Such passes are often used by budget-conscious international travelers. 

“While all attractions have experienced reduced visitorship in 2026, our drop compared to the market in general is larger due to our prior dominance with pass programs and their international presence,” Anthony Malkin, CEO of ESRT, said during the firm’s earnings call early Thursday afternoon. “Softer visitation persisted through the second quarter.” 

Projections for reduced visits to the observatory prompted ESRT to reduce its 2026 core FFO assumptions to a range of 75 cents to 79 cents per share compared to 85 cents to 89 cents per share FFO in February. 

Malkin said the Empire State Building has in the past seen more than 60 percent of its observatory traffic derive from international travelers, but that number shifted to 40 percent last week when it performed its second highest visitor numbers of 2026. He said the World Cup generated no bump in observatory visits. 

“I think the World Cup was a distraction,” Malkin said. “It had a lot of people on the streets, but not a lot of people who were there for anything but the World Cup.”

ESRT netted $196.9 million of revenue for the second quarter, up slightly from $191.3 million a year ago. 

The REIT achieved gains in its office portfolio with its 20th consecutive quarter of positive leasing spreads while signing 363,968 rentable square feet of leases. Its total commercial portfolio was 94.9 percent leased by the end of the second quarter, up from 93.8 percent from the prior quarter.

Leasing activity was highlighted by a new 16-year, 100,948-square-foot lease with United Talent Agency at the Empire State Building. Ryan Kass, executive vice president, co-head of real estate and chief revenue officer at ESRT, said there is now one full floor available to lease in the Empire State Building, and ESRT will look to increase rents there. 

Kass added that ESRT now has a “healthy” pipeline of 200,000 square feet of leases in negotiation. 

“Demand continues to concentrate in high-quality, modernized, amenitized, transit-oriented buildings owned by well-capitalized landlords with proven operating platforms,” Kass said. “New York City’s leasing market remains strong and provides a favorable backdrop for execution with demand broad-based across finance, professional services, TAMI [technology, advertising, media and information] and consumer products.”

The company was busy on the transaction front during the second quarter, which included a $275 million disposition of 250 West 57th Street where the buyer, Namdar Realty Group, assumes $180 million of mortgage debt on the 26-story office building.

ESRT also acquired land beneath 111 West 33rd Street and 1400 Broadway for an aggregate purchase price of $110 million.

On the debt front, ESRT closed on a $245 million unsecured delayed-draw term loan during the quarter that matures in 2032. The REIT said the loan proceeds are expected to be drawn in January 2027 to repay existing debt.

“We maintain ample liquidity, a well-laddered debt maturity schedule and have no unaddressed debt maturities until January 2028,” Christina Chiu, chief financial officer at ESRT, said during the earnings call. “We maintain a well-positioned and flexible balance sheet and predominantly unencumbered portfolio that provides substantial optionality.”

Andrew Coen can be reached at acoen@commercialobserver.com.