New York City's office districts aren't the ghost towns they were five years ago. The city's return-to-office shift is driving shares of one office landlord higher Thursday.

SL Green Realty, the $3.86 billion New York City-based office real estate investment trust, or REIT, on Wednesday reported funds from operations of $1.43 a share on roughly $172 million in net rental revenue in its second quarter. Funds from operations beat FactSet expectations that called for $1.21 a share, though rental revenue fell short of analyst estimates.

The company now expects full-year funds from operations in a range of $5.60 to $5.90 a share, up from guidance of $4.40 to $4.70 a share.

The stock was up about 5.9% to $53.06 in late morning trading, on track for its highest close since early July, according to Dow Jones Market Data. The results boosted other office REITs with exposure to the city: BXP was up 1.8%, while $Vornado Realty Trust(VNO-N)$ was 2% higher.

SL Green's same-store Manhattan real estate is 94.7% occupied, it said in a release, and it expects occupancy to increase to 95% by the end of the year.

Thank the city's strong return-to-office culture, says Piper Sandler analyst Alexander Goldfarb. "What's incredible is the rapidity of this office recovery, perhaps the strongest since the dot.com era, from fear of permanent WFH during the pandemic, all jobs shipped to Texas, and AI displacing office workers, with now companies scrambling for space," Goldfarb wrote in a report.

"The key theme -- premium, commuter convenient space wins, which is square in SLG's target zone," added the analyst, who rates SL Green Overweight with a $65 price target.

The story of urban office centers in the wake of the Covid-19 pandemic and ensuing shift to remote and hybrid work has long been that of a flight to quality. The most pristine buildings with the best locations and amenities -- often called "class A" space -- would hold up fine, the bull case went. Outdated, bare-bones, or poorly located class B or C properties would struggle.

But New York City office landlords are reaping higher rents of a tight rental market even outside of tip-top office space, says Piper Sandler's Goldfarb.

"If you are a B office landlord in New York, who is financially solvent [and] has buildings that have good views, you can actually do well," he says. He noted that it isn't uncommon for class B buildings to fetch rents around $70 a square foot, which he says used to be more common among class A buildings. "Not every tenant wants to pay $150-plus to be in a building."

It has been a busier year for Manhattan office leasing than the same period last year, according to JLL's second-quarter office report. While companies lease more space, office stock remains in relatively short supply, sending rents higher.

"This dynamic is likely to persist as high-quality large-block options in Manhattan become increasingly limited," JLL researchers Jordan Marshall and Jack Cahill wrote in the report. "Should current absorption trends hold, the supply-demand imbalance for top-tier space is likely to intensify further and push prices higher before the next wave of new deliveries reaches the market."

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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July 23, 2026 11:59 ET (15:59 GMT)

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