Steven Roth

The bad news first. 

Steven Roth’s Vornado Realty Trust confronted higher than usual vacancies at its office and retail properties — Meta abandoned a 300,000-square-foot office at its 770 Broadway in July — and the REIT wrote down the value of its portfolio by $600 million in February. That was a month after the S&P 500 delisted Vornado amid a year-plus slide in its share value. And, in April, the company suspended dividends on its common shares.

Amid all of this, Vornado also had to pause its longtime multi-tower plan to add millions of square feet of commercial and residential space around Manhattan’s Penn Station, where it already controls millions of feet. 

Roth, for his part, took it in stride. Hybrid work schedules had tanked a goodly portion of office demand, and brick-and-mortar
retail was struggling long before COVID. Higher interest rates didn’t help. What could you do? Commercial real estate is a less desirable investment for the moment. 

“Steel, concrete and curtain walls are important, but, in our business, capital is the essential raw material,” Roth said during a February 2023 earnings call. “We are now in the middle of a Federal Reserve tightening cycle, the result of which is interest rates are up and capital is scarce. And that’s an understatement.” 

Now the good news. If capital is the essential raw material for growth, property itself is the hedge in the meantime. And Vornado has a lot of it. The REIT owns and operates 62 properties just in Manhattan totaling 20.2 million square feet, 9 million of it around Penn Station. There’s millions more square feet in Chicago and San Francisco. 

Most of that square footage is occupied, too: The firm reported 91.9 percent office occupancy in Manhattan at the end of 2022. As for Meta, the company occupied its 730,000 square feet in the converted Farley Post Office last summer, and Vornado in January 2023 finalized a deal with investment house Citadel to master-lease all 585,000 feet of 350 Park Avenue.  

At that same address — as if accentuating Roth’s sanguine attitude about the present and optimism for the future — Vornado, Rudin Management and Citadel also in January announced plans for a 1.7 million-square-foot office tower at the site. Citadel is due to anchor it.