Empire State Realty Optimistic on Street Retail

John Kessler, president and COO of Empire State Realty Trust (NYSE: ESRT), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Kessler noted that the REIT is experiencing positive results in terms of leasing spreads and same-store net operating income (NOI) growth.

Turning to the company’s street retail activities, Kessler said that retailer Target signed a lease during the first quarter for a store in Herald Square in Manhattan. He noted that Target will be joined by Foot Locker and Sephora at the Herald Square location.

“We feel very good about our street retail. It’s about 7 percent of our total business, and we’re roughly 94 percent leased today,” Kessler noted.

Empire State has “tremendous potential” to grow income across the portfolio, according to Kessler. He noted that the company sees about $110 million of revenue growth opportunity across the portfolio for the next five to six years.

Turning to its namesake, the Empire State Building, Kessler said renovation of the property is proceeding “extremely well.” The renovation project started about 10 years ago and today there is only about 250,000 square feet of office space that has not been redeveloped, out of a total of roughly 2.7 million square feet, according to Kessler. He noted that the building is attracting “world-class” tenants.