Vornado Sees NYC Retail Distress—for Other Landlords
(Bloomberg) -- Retail real estate is a headache for landlords all over New York -- well, unless they’re named Vornado.
Steve Roth, chairman and chief executive officer of Vornado Realty Trust, said his company, one of the largest owners of Manhattan street retail, is doing just fine, even as its neighbors struggle with declining shopper traffic. More than half of the real estate investment trust’s store value is in the high-rent Times Square and upper Fifth Avenue corridors, Roth said on Vornado’s earnings call Tuesday. And the properties in its New York retail division are 96.3 percent occupied.
For others, it’s not so rosy.
For landlords who bought at the top of the market and loaded up with debt, “we are beginning to see the first signs of distress,” Roth said on the call. With owners struggling to cover the mortgage with income from their properties, and few buyers around to come to their rescue, lenders may have to step in, he said.
“Pricing is clearly off for everything except prime, triple-A, well-leased assets,” said Roth, whose company controls about 2.7 million square feet (251,000 square meters) of retail properties, mostly in Manhattan.
Even Vornado is dealing with impending vacancies. On the call, Roth said three tenants at 830 Madison Ave. are likely to leave and the company hasn’t found their replacements yet.
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