Empire State Realty Trust (ESRT) recorded brisk leasing and transaction activity in the third quarter of 2026. However, these gains were not enough to offset persistently weak visitor figures at the famed Empire State Building. According to the latest quarterly report, the real estate investment trust signed deals covering 189,477 square feet, of which 170,608 square feet were office space. The occupancy rate of the office portfolio rose to 91.9 per cent as of 30 September, up from 89.1 per cent in the previous quarter and 89.7 per cent in the third quarter of 2025.
Among the key transactions of the quarter was an agreement with fintech firm Octaura Holdings for 28,914 square feet of office space at 111 West 33rd Street. Inside the Empire State Building itself, architectural practice Corgan secured 15,157 square feet, while investment firm Zenyth Advisors signed leases for 13,459 square feet.
Portfolio streamlining and capital allocation
Alongside its leasing successes, ESRT disposed of selected assets. In August, the company sold the 22-storey office building at 1359 Broadway in Midtown South to Thor Equities for 217.5 million dollars. The proceeds are being deployed for share buybacks and debt repayments. Back in April, the company had already transferred the 26-storey office building at 250 West 57th Street to Namdar Realty Group for around 280 million dollars. During the analyst call, ESRT President Christina Chiu explained that, following its withdrawal from the suburbs, the company had focused squarely on Manhattan. The ongoing emphasis remains on cash flow and net asset value per share.
Tourism headwinds and management realignment
While the office segment made gains, footfall at the Empire State Building observation deck remained subdued. Following a 48.5 per cent revenue slump in the second quarter, the observatory's net operating income reached 15.6 million dollars in the third quarter, a slight increase from the 12.4 million dollars recorded in the preceding period. This continued sluggishness coincides with a downturn in international travel following the re-election of Donald Trump in 2024, as well as heightened competition.
ESRT Chief Executive Officer Anthony Malkin emphasised that repositioning visitor management takes time and that the business model must be adapted to changing conditions. To implement this strategy, the company appointed Andrew Giancamilli, former Chief Operating Officer of the FanDuel platform, to lead the observatory division effective 1 October. Giancamilli is tasked with diversifying the customer base and optimising the revenue potential of the globally recognised brand.
At group level, Funds from Operations (FFO) fell in the third quarter to 51.7 million dollars, or 20 cents per share. In the previous quarter, FFO stood at 57 million dollars, compared with 59.3 million dollars in the third quarter of 2025. Total revenue amounted to 193.1 million dollars, compared to 196.9 million dollars in the second quarter of 2026 and 197.7 million dollars in the prior-year period.
