SL Green Realty, Manhattan’s largest office landlord, is signaling that foreign investors remain eager to bet on New York real estate.
Just ask CEO Marc Holliday, who recently led a team on a 10-day swing through Asia, holding two dozen meetings with buyers, sellers, asset managers and sovereign wealth funds.
“The appetite to invest in New York was as strong as I have ever seen,” Holliday said Thursday on a fourth-quarter earnings conference call. The idea of “Manhattan real estate being sort of the real estate equivalent of U.S. Treasuries really resonated in terms of risk-adjusted downside safety and a path towards real returns where you can still earn double-digit returns on good core real estate assets.”
While the U.S. dollar declining could attract some investors, he said that wouldn’t be a deciding factor as investor interest in New York was solid even when the dollar was stronger against foreign currencies. “New York City is differentiating itself from other U.S. cities in significant ways and will continue to be the central focus of investors looking to deploy capital in debt and equity this year and beyond,” Holliday said.
Harrison Sitomer, SL Green’s chief investment officer, added that investor interest in New York is “really across the globe,” pointing to interest both domestically and in Canada, Europe and the Middle East. “I haven't seen this widespread of demand since pre-2020, and New York is clearly defining itself as far and away the city to invest capital in today,” Sitomer said.
SL Green’s optimism about foreign investing comes despite fears that New York’s newly sworn‑in democratic socialist mayor, Zohran Mamdani, might rattle confidence.
Mamdani has pitched rent freezes on some 1 million rent-stabilized apartments and tax increases on the wealthy. That’s raised worries that investor appetite for New York’s commercial real estate would sour. Mamdani was notably absent from the industry’s biggest night, a Jan. 22 gala hosted by the Real Estate Board of New York.
A July study from investment management firm Invesco had found cross-border capital spending was shrinking in the United States because of tariff and geopolitical concerns. The reduction in investment activity was projected to have an impact on major gateway markets such as New York.
Major fourth-quarter leases
Still, Holliday said "fundamentals" in New York are strong. The city closed last year with its best office leasing volume since at least 2019, brokerages’ data has shown, driven by demand for top-tier properties in midtown Manhattan, home to a slew of SL Green buildings including the One Vanderbilt trophy tower.
Major SL Green leases last quarter included Coinbase expanding its footprint by 92,663 square feet at One Madison Ave. to a total of about 160,000 square feet. Other deals included Cliffwater signing a lease spanning about 38,000 square feet at 245 Park Ave. and law firm Groombridge, Wu, Baughman & Stone for 42,866 square feet at 1185 Avenue of the Americas.
Against concerns the growing use of artificial intelligence will lead to cuts in office jobs, Steve Durels, who heads leasing at SL Green, said he hasn’t seen any instance “where tenants have downsized as a result of AI.”
Meanwhile, demand from AI-related tenants continues to be brisk after they leased a million square feet in the city combined last year, he said, adding that 80 tech tenants are in the market right now, including 13 AI-related firms.
“To the extent that there's any space savings on other businesses, it's clearly being offset by an exploding growth of AI demand in the marketplace,” Durels said.