ESRT office occupancy rises to 91.9% in third quarter

Empire State Realty Trust ended September with its office portfolio 91.9% occupied, up from 89.1% in the second quarter and 89.7% a year earlier, according to third-quarter results released Tuesday.

In August the trust sold the 22-story 1359 Broadway in Midtown South to Thor Equities for $217.5 million, a deal Commercial Observer first reported. It is redeploying the proceeds toward share repurchases and debt repayment. The sale followed April's sale of the 26-story 250 West 57th Street to Namdar Realty Group for roughly $280 million.

For an allocator pricing Midtown South office, the 1359 Broadway trade is a fresh comparable from a listed owner that is sending the cash to buybacks and debt reduction rather than to more acquisitions. If that stance holds, a private fund assembling similar stock bids against one fewer listed buyer and has a recent print to benchmark its own basis against. Christina Chiu, ESRT's president, described the objective on the call as cash flow per share and value per share, which puts the sale price and any buyback into the same per-share math.

The trust signed 189,477 square feet of leases in the quarter, 170,608 square feet of it office space. Named deals included fintech firm Octaura Holdings' 28,914 square feet at 111 West 33rd Street and, at the Empire State Building, architecture firm Corgan at 15,157 square feet and investment firm Zenyth Advisors at 13,459 square feet.

“Over the last five years, we have sold out of suburbs, and began to look at Manhattan assets, where we executed the business plan, and look at sales, and will continue to be active,” Chiu said on the call. “The key objective is cash flow per share as well as value per share, so all those items are on the table, including share buybacks.”

The Empire State Building observatory, a separate business from the office portfolio, generated $15.6 million of net operating income in the third quarter, up from $12.4 million in the second, while visitation “continued to be weak,” according to the earnings report. Observatory revenue fell 48.5% in the second quarter. Commercial Observer reported that the weakness coincides with a drop in international tourism following President Donald Trump's re-election in 2024. “This problem did not happen overnight, and it will not be fixed overnight,” CEO Anthony Malkin said on the call.