- Empire State Realty Trust signed 189,477 square feet of leases in Q3, including 170,608 square feet of office, lifting office occupancy to 91.9% from 89.1% in the second quarter.
- Observatory visitation stayed weak after a 48.5% second-quarter revenue drop, and funds from operations slipped to $51.7 million, or 20 cents per share, from $59.3 million a year earlier.
- ESRT is recycling Manhattan sale proceeds into buybacks and debt paydown while it bets on a new observatory chief, so cash flow per share is the number to watch.
Empire State Realty Trust had a strong quarter of leasing, but its signature tower is still dragging on results, according to Commercial Observer’s look at ESRT’s third-quarter results.
The REIT inked 189,477 square feet in new deals, 170,608 of it office, and closed the quarter with offices 91.9% occupied.
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Office Occupancy Climbs
Occupancy was 89.1% three months earlier and 89.7% a year ago. Fintech firm Octaura Holdings led the deal list with 28,914 square feet at 111 West 33rd Street.
Inside the namesake tower, Corgan, an architecture firm, took 15,157 square feet, and Zenyth Advisors, an investor, leased 13,459.
Selling Into Strength
Thor Equities paid $217.5M in August for 1359 Broadway in Midtown South, and ESRT is steering that cash to buybacks and debt reduction. Namdar Realty Group bought 250 West 57th Street in April for about $280M.
President Christina Chiu said on the earnings call that the company has exited its suburban holdings and will keep selling in Manhattan, with cash flow and value per share as the goals. Buybacks, she said, are on the table.
Investors were already pressing the point. We covered Erez’s 5.8% stake, a $43M position filed Oct. 1 after ESRT shares had lost about a third of their value this year.
The Observatory Problem
Foot traffic at the tower stayed soft, the earnings report said, after observatory revenue fell 48.5% in Q2. Observatory net operating income was $15.6M in Q3, against $12.4M the prior quarter.
The report ties the slump partly to a decline in international tourism since 2024. CEO Anthony Malkin said on the call the problem will not be fixed overnight, and that ESRT needs to rework how it acquires customers and monetizes its brand.
A New Operator
Malkin pointed to the Oct. 1 hire of Andrew Giancamilli, a former FanDuel chief operating officer, to run observation deck operations. He called him the right fit to diversify the customer base and redefine the revenue model.
Why It Matters
Strong leasing did not carry the bottom line. FFO fell to $51.7M, or 20 cents a share, from $57M in Q2 and $59.3M in Q3 2025. Revenue came in at $193.1M, down from $196.9M last quarter and $197.7M a year ago.
Other Manhattan landlords are seeing a different picture. Vornado’s FFO rose to $126.6M, and CEO Steven Roth called its Manhattan leasing the strongest he has seen, as we noted in Vornado’s Q3 results. ESRT’s office business is healthy. Its attraction business is the outlier.
What’s Next
Watch whether Giancamilli’s changes lift visitation and observatory income over the coming quarters. Also watch for more Manhattan sales, since ESRT says it will stay active.
