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Vornado (VNO) Inks 53K Sq.Ft. Lease With Life Time at PENN 1
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Vornado Realty Trust (VNO - Free Report) recently signed a lease agreement with the United States’ premier healthy lifestyle brand — Life Time (LTH - Free Report) — for the first three floors of its PENN 1 property. With office tenants’ growing preference for top-notch office properties with class-apart amenities, the move is likely to attract more tenants to VNO’s premier destination, aiding leasing activity.
Life Time will occupy more than 53,000 square feet of this redeveloped 57-story building situated adjacent to Madison Square Garden in New York City. Strategically located at 33rd Street Plaza with its main entrance facing Madison Square Garden, Life Time is set to offer the most indoor pickleball courts in Manhattan. The opening will be carried out in two phases beginning this summer.
In the initial phase, Life Time will replace the existing fitness center on the tower's second and third floors with a new, chic athletic club for office workers, commuters and neighborhood residents.
The company’s club will feature boutique studios for its exclusive group studio, indoor cycle formats and hundreds of pieces of best-in-class cardiovascular, functional and strength training equipment. Additionally, LTH will offer a curated recovery space, spa, exquisite dressing rooms offering high-end amenities and a juice bar complete with its proprietary nutritional products.
In the second phase, scheduled to open in early 2024, Life Time will add seven ground-level pickleball courts, a lounge, seating and bar area, and dedicated spaces for its Signature Group Training programs — Alpha and GTX — and one-on-one Dynamic Personal Training.
Per Glen Weiss, executive vice president, Vornado, “We are delighted to add LifeTime as another key piece of our overall PENN DISTRICT strategy. The addition of Life Time's premier athletic club offers our current and future tenants, neighborhood residents, and commuters a first-class health and fitness facility to enjoy daily.”
Vornado has been experiencing healthy leasing activity across its portfolio of top-quality office spaces in a few select, high-barrier-to-entry markets of New York. Moreover, its efforts to redevelop its assets are likely to help the company command more rents at its properties, thereby increasing profitability.
Notably, in January 2023, Vornado leased its 350 Park Avenue office building, encompassing 585,000 square feet, to Citadel on an “as is” basis for 10 years. The initial annual net rent for the property was $36 million, retroactive to Jun 15, 2022.
Additionally, the company entered a joint venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st Street for $40 million. VNO will combine this property with 350 Park Avenue and 40 East 52nd Street to create a premier development site, to be known as “Site” collectively.
Nonetheless, the U.S. office real estate market has been choppy for quite some time now, with negative absorption and increasing vacancy levels. The continuation of the flexible working environment and pandemic-led job cuts have led to diminishing office space utilization.
Amid this, demand for office properties is likely to remain subdued in the near term, which could hamper leasing volume to a certain extent.
Also, stiff competition from developers, owners and operators of office properties and other commercial real estates, including sublease space available from its tenants, could curb Vornado’s ability to attract and retain tenants at relatively higher rents.
Vornado currently carries a Zacks Rank #5 (Strong Sell).
Its shares have lost 25.3% in the year-to-date period compared with its industry’s decline of 2.7%.
The Zacks Consensus Estimate for Ventas’ current-year funds from operations (FFO) per share has moved marginally northward over the past month to $2.98.
The Zacks Consensus Estimate for Host Hotels’ ongoing year’s FFO per share has been raised 1.6% upward over the past month to $1.91.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Vornado (VNO) Inks 53K Sq.Ft. Lease With Life Time at PENN 1
Vornado Realty Trust (VNO - Free Report) recently signed a lease agreement with the United States’ premier healthy lifestyle brand — Life Time (LTH - Free Report) — for the first three floors of its PENN 1 property. With office tenants’ growing preference for top-notch office properties with class-apart amenities, the move is likely to attract more tenants to VNO’s premier destination, aiding leasing activity.
Life Time will occupy more than 53,000 square feet of this redeveloped 57-story building situated adjacent to Madison Square Garden in New York City. Strategically located at 33rd Street Plaza with its main entrance facing Madison Square Garden, Life Time is set to offer the most indoor pickleball courts in Manhattan. The opening will be carried out in two phases beginning this summer.
In the initial phase, Life Time will replace the existing fitness center on the tower's second and third floors with a new, chic athletic club for office workers, commuters and neighborhood residents.
The company’s club will feature boutique studios for its exclusive group studio, indoor cycle formats and hundreds of pieces of best-in-class cardiovascular, functional and strength training equipment. Additionally, LTH will offer a curated recovery space, spa, exquisite dressing rooms offering high-end amenities and a juice bar complete with its proprietary nutritional products.
In the second phase, scheduled to open in early 2024, Life Time will add seven ground-level pickleball courts, a lounge, seating and bar area, and dedicated spaces for its Signature Group Training programs — Alpha and GTX — and one-on-one Dynamic Personal Training.
Per Glen Weiss, executive vice president, Vornado, “We are delighted to add LifeTime as another key piece of our overall PENN DISTRICT strategy. The addition of Life Time's premier athletic club offers our current and future tenants, neighborhood residents, and commuters a first-class health and fitness facility to enjoy daily.”
Vornado has been experiencing healthy leasing activity across its portfolio of top-quality office spaces in a few select, high-barrier-to-entry markets of New York. Moreover, its efforts to redevelop its assets are likely to help the company command more rents at its properties, thereby increasing profitability.
Notably, in January 2023, Vornado leased its 350 Park Avenue office building, encompassing 585,000 square feet, to Citadel on an “as is” basis for 10 years. The initial annual net rent for the property was $36 million, retroactive to Jun 15, 2022.
Additionally, the company entered a joint venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st Street for $40 million. VNO will combine this property with 350 Park Avenue and 40 East 52nd Street to create a premier development site, to be known as “Site” collectively.
Nonetheless, the U.S. office real estate market has been choppy for quite some time now, with negative absorption and increasing vacancy levels. The continuation of the flexible working environment and pandemic-led job cuts have led to diminishing office space utilization.
Amid this, demand for office properties is likely to remain subdued in the near term, which could hamper leasing volume to a certain extent.
Also, stiff competition from developers, owners and operators of office properties and other commercial real estates, including sublease space available from its tenants, could curb Vornado’s ability to attract and retain tenants at relatively higher rents.
Vornado currently carries a Zacks Rank #5 (Strong Sell).
Its shares have lost 25.3% in the year-to-date period compared with its industry’s decline of 2.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Ventas (VTR - Free Report) and Host Hotels & Resorts (HST - Free Report) . While Host Hotels sports a Zacks Rank #1 (Strong Buy), Ventas carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ventas’ current-year funds from operations (FFO) per share has moved marginally northward over the past month to $2.98.
The Zacks Consensus Estimate for Host Hotels’ ongoing year’s FFO per share has been raised 1.6% upward over the past month to $1.91.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.