For years, the office conversation has been dominated by decline. Vacancy rates, downsizing, remote work, distressed loans, and the supposed death of the central business district became the defining narrative for commercial real estate. But during Vornado Realty Trust’s latest earnings call, chairman Steve Roth made something else clear: some of the biggest office landlords in the country now believe the downturn is over for the buildings that matter most.
The company’s first-quarter earnings missed analyst expectations, but that barely registered during a call that evolved into a sweeping argument about the future of New York office real estate, the economics of development, the role of AI in cities, and the increasingly tense relationship between wealthy investors and progressive politics.
At the center of the discussion was the planned 350 Park Avenue tower, the 1.9 million-square-foot office project being developed with Citadel founder Ken Griffin and the Rudin family. Griffin recently exercised his option to take a 60 percent stake in the development, while Vornado retained the ability to either fully participate or sell its interest later this summer.
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But the project became politically charged after New York City Mayor Zohran Mamdani released a viral video promoting a pied-à-terre tax proposal in front of Griffin’s penthouse at 220 Central Park South. Roth called the move “irresponsible and dangerous,” arguing that politicians increasingly portray wealth creation as something inherently exploitative rather than foundational to the city’s economy.
The comments quickly turned into something larger than a defense of Griffin. Roth framed the dispute as part of a growing disconnect between political rhetoric and the financial realities of running New York.
“What these pols seem to be saying is that the rich are evil or the enemy,” Roth said during the call. “But the rich whom the politicians are targeting started with nothing, are the epitome of the American dream.”
Yet the most revealing part of the earnings call had less to do with politics than with how aggressively Vornado is positioning itself for what it believes will be a prolonged landlord’s market for elite office space.
Executives repeatedly emphasized that New York office fundamentals are strengthening faster than many investors realize. Manhattan leasing volume reached nearly 12 million square feet during the first quarter, the strongest start to a year since 2014. Vornado described demand for top-tier office buildings as accelerating while available supply in the city’s best corridors continues to shrink.
The company’s thesis rests on a relatively simple idea: there are very few buildings that truly compete for the largest and most demanding tenants, and it has become extraordinarily expensive to build new ones.
Roth argued that replacement costs for new office towers now require rents that can exceed $200 or even $300 per square foot to justify development. That changes the economics of the entire market. Older Class A buildings in prime locations suddenly look far more valuable when tenants have limited alternatives and new supply becomes nearly impossible to finance.
That scarcity is already reshaping leasing behavior. Vornado executives said tenants are increasingly renewing leases early because they cannot find equivalent space elsewhere. Average starting rents across the company’s Manhattan portfolio reached roughly $103 per square foot during the quarter, while executives openly suggested they would be disappointed if rents increased “only” 25 percent over the next five years.
The call also offered a rare counterargument to the widespread belief that AI will permanently reduce office demand. Instead, Vornado executives argued the opposite may happen in cities like New York and San Francisco.
Chief Financial Officer Michael Franco compared the AI transition to earlier technological shifts like the rise of personal computers and the internet. Each initially sparked fears of workforce reductions, but ultimately increased productivity and created entirely new categories of office-based work. Vornado believes AI will once again concentrate talent in global innovation hubs rather than decentralize it.
That view is already influencing where the company is deploying capital. Alongside the planned 350 Park Avenue tower, Vornado recently acquired a 49 percent stake in Park Avenue Plaza, a trophy Park Avenue office tower executives described as irreplaceable. The company also pointed to rising leasing momentum at 555 California Street, where large deals are now exceeding $160 per square foot.
At the same time, Vornado’s leadership acknowledged that not all office buildings will benefit equally from the recovery. Roth repeatedly emphasized that the company competes within a relatively narrow slice of the market — roughly 180 million to 200 million square feet of elite Class A office product — rather than the broader office inventory that continues struggling with obsolescence and weak demand.
That distinction increasingly defines the post-pandemic office market. Commodity office space continues to face pressure from hybrid work and capital constraints, while the best buildings in the strongest urban corridors are beginning to behave more like luxury assets with limited supply and pricing power.
Vornado’s strategy reflects that divide. The company is simultaneously buying back stock, pursuing trophy acquisitions, and preparing for one of the largest office developments in the country. Executives also made clear they are willing to dispose of weaker or non-core assets while concentrating capital into buildings they believe will dominate the next cycle.
“There are no sacred cows,” Roth said when discussing future asset sales.
The broader message from the call was unmistakable. Vornado believes the office sector is no longer primarily a story about remote work. It is becoming a story about scarcity, construction costs, talent concentration, and political risk.
That last factor may ultimately prove the most unpredictable. Even as Vornado grows more optimistic about demand, rents, and long-term growth, the company’s leadership is clearly worried that political hostility toward wealth and development could discourage exactly the kind of investment New York now depends on.
For decades, New York’s office market operated on the assumption that global capital would always want to build there. Vornado’s earnings call suggested that assumption may no longer be automatic. The demand is still there. The capital may be too. But increasingly, developers and investors are asking whether the city still wants them.
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