Vornado Sees Big Manhattan Office Rent Spike

Vornado Realty Trust saw rents rise by 24% on 759,000 square feet of office space it re-leased in the second quarter of 2006. Average rents on the space, which had been $42.01 per square foot, are now $52.19, representing a roughly $7,726,000 increase in rental revenue, according to a 10Q filing on Aug. 1.

The rent spike speaks to strong demand for New York office space. "It's an endorsement of the strength of the New York market," said Jamie Feldman, an office and industrial REIT analyst at UBS. He added that REITs with serious exposure to the New York market--Boston Properties and SL Green Realty Corp.--showed strong results in recent earnings releases.

Vornado also leased 458,000 square feet of space in the first quarter at rents of $44.28 per square foot, a 4% increase. Calls to Vornado were referred to a spokeswoman, who declined to comment.