New York City's largest office landlord is generating more cash than expected as companies clamor for a dwindling supply of premier Manhattan office space.
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On the strength of rapidly increasing rents and profits generated by the supertall One Vanderbilt, SL Green Realty Corp. raised its 2026 guidance for funds from operations — a key metric of cash flow for REITs — by 26% when it reported its second-quarter earnings on Wednesday.
SL Green's executives have been touting the market's turnaround, and the REIT's position to benefit from it, for more than a year. But the speed at which demand has risen took even them by surprise.
“This should not be a big surprise since we forecasted this positive momentum back in December,” CEO Marc Holliday said Thursday on a call with analysts. “Maybe the magnitude is even more than we expected, but it's obviously a pleasant result.”
Shares in SL Green rose 7% Thursday to $53.61, their highest price since October, and especially notable considering how lukewarm Wall Street has been on office real estate even during the recovery.
Occupancy across the company's Manhattan portfolio hit 94.7% in the quarter, up from 90.4% a year prior. The company’s rents for new leases averaged $98.42 per SF, 18% higher than the tenants being replaced, and SL Green expects to keep pushing prices.
“Anything on Park Avenue, we’ve raised rents dramatically,” said Steve Durels, SL Green's executive vice president and director of leasing. “Across the portfolio, we’ve been consistently raising asking rents throughout the year.”
The city is by far the strongest office market in the country, with 23M SF leased in the first six months of 2026, the most since 2002, and average rents up 6% over the past year, according to Colliers. Availability has fallen from 18% in June 2023 to 13% last month.
SL Green has filled up some of its biggest properties, including the 2.3M SF 11 Madison Ave., which this week landed artificial intelligence firm Legora Systems for its final available space, the 98K SF 11th floor.
Also 100% leased is One Vanderbilt, the 1,401-foot tower atop Grand Central Terminal that, at $4.7B, is the most valuable office tower in the country — and its cash cow status is only growing. Of the $1.20 per share of additional FFO that SL Green now projects to bring in, 80 cents was attributed to One Vanderbilt, which signed the first $320-per-SF lease in the city during the first quarter.
“This property has generated so much cash flow that we repatriated all of our equity long ago,” SL Green Chief Financial Officer Matthew DiLiberto said on the call.
The REIT is not quite halfway through its goal to sell $2.5B of assets this year, having sold four of the 11 properties it has earmarked to offload. It is under contract to trade 10 E. 53rd St. to Meadow Partners for $312M and sold a 49% stake in its next office development, 346 Madison Ave., at a $175M valuation to Mori Building Co.
Next up to be sold is 245 Park Ave., which Chief Investment Officer Harrison Sitomer said is in “advanced stages.”
Institutional investors are back hunting for trophies, with $3.5B of Manhattan office properties selling in the first half of the year, up 31% from 2025, according to Ariel Property Advisors.
“This is one of the better investment sales backdrops we've seen in quite some time with respect to our program,” Sitomer said.
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