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Anthony Malkin

Thank you and welcome back to you, Heather. Congratulations on your new addition and good afternoon to everyone. Yesterday we reported ESRT's strong fourth quarter and 2024 results. We are happy to discuss today our continued leasing momentum, observatory execution, and our outlook for 2025.
In the fourth quarter, FFO came in above expectations, our leasing team again put points on the board with approximately 380,000 square feet leased in the quarter. We now have achieved more than three years of consecutive quarterly leased percentage growth and positive New York City office rent spreads.
For the year we leased $1.3 million square feet, up from 982,000 square feet in 2023. Our Manhattan office portfolio is over 94% leased, and that reflects the desirability of our top of tier, modernized, amenitized, well located, energy efficient, sustainability leading portfolio.
Return to office is no longer a question. As leasing momentum in the Manhattan market has told the story for itself, the need to provide a good workspace is a boon for ESRT, and the price GAAP between brand new offices and our products has enabled us to raise the rents and reduce concessions.
Trip Advisor's number one attraction in the world, the observatory, continued its performance with year-over-year growth in fourth quarter and full year 2024 net operating income that exceeds 2019 levels. As this benchmark has been passed, we will no longer refer to our performance relative to 2019 results.
Our focus remains to provide visitors with an unmatched customer experience to drive top line growth, manage expenses, and continue to build exceptional brand awareness. In 2024, the Empire State Building had over $485 billion global media impressions, an increase of 25% year-over-year, and generated globally over $950 million in advertising value equivalency.
We enter 2025 on our front foot, the leasing environment in New York City continues to benefit our product and price point. In fact, it has allowed us to increase rents and reduce free rent. The office sector statistics illustrate the results of haves and have-nots. The 'haves' are buildings like ours which have been modernized, are well located near mass transit.
Our sustainability leaders have great amenities and are owned by a financially stable landlord. Our product meets the demand of informed better credit tenants. While it may be bumpy with our reduced inventory of space to lease, we expect positive occupancy absorption again for the full year 2025.
Our observatory deck remains the leader. Our average check size per visitor increased year-over-year, and we expect continued growth in 2025 as we introduce a new dynamic pricing model designed to monetize high demand times through the day. We are still below overall 2019 levels of volume and have room for upside as visitation levels improve.
We continue to score the market for additional transaction opportunities and are prepared to act when we see opportunities to enhance growth either through expansion or trade out of our existing portfolio. The maintenance of a best in class balance sheet allows ESRT tremendous flexibility to lease and transact opportunistically and to create additional value for our shareholders.
Our entire organization remains laser focused on the company's five priorities to lease space, sell tickets to the observatory, manage our balance sheet, identify growth opportunities, and achieve our sustainability goals. Tom, Christina, and Steve will provide more detail on our progress and how we plan to accomplish these goals in 2025.

Thomas Durels

Thanks, Tony, and good afternoon, everyone. In 2024, our property team delivered another year of exceptional performance. We leased over $1.3 million square feet in our commercial portfolio, which was our highest annual volume since 2019. Our Manhattan office portfolio stands at 94.2% leased, an increase of 10 basis points compared to last quarter, and up 160 basis points compared to a year ago. And an increase of 670 basis points since the fourth quarter of 2021.
For the 12th consecutive quarter, our office and retail portfolio achieved higher least percentage and positive absorption. We had our 14th consecutive quarter with positive mark to market lease spreads in our Manhattan office portfolio, where our average net effect of rent per square foot increased by 13% year-over-year.
We signed major office leases with quality tenants across our portfolio, including Burlington, Sol de Janeiro, Bloomsbury Publishing, AT Kearney, and Ponterra. We enhance the amenities at the Empire State Building with the opening of a multi-sports court for basketball and pick a ball that converts to a 275 person presentation room, a new tenant lounge with full service wet bar for hosting tenant events, and a golf simulator lounge.
We continued to deliver an exceptional tenant experience and superior service which contributed to our impressive track record of tenant retention and expansions. In 2024, approximately 450,000 square feet of our annual lease volume came from early renewals with existing tenants where we proactively extended future lease explorations.
Since our IPO in 2013, we have signed 299 current tenant expansion leases totaling $3 million square feet compared to our current total portfolio size of $8.6 million square feet. Our multi-family portfolio with occupancy of 98.5% at year end continues to excel, benefiting from robust market fundamentals, strategic property improvements, and improved operations.
This has proven to be a great exchange of existing properties for what we perceive to be better for ESRT's growth. We finished the year strong and in the fourth quarter we leased a total of 379,000 square feet. Including an 11 year, 37,000 square foot expansion lease with Booking Holdings at the Empire State Building, which along with a 7 year 27,000 square foot lease extension, more than doubles their footprint to 64,000 square feet.
We were told that booking holdings consolidated their New York City offices into the Empire State Building because of their employees' experience and our partnership on sustainability. We signed a 16 year 79,000 square foot expansion lease with an investment firm at One Grand Central Place representing a 56% growth in that tennis footprint along with a two-year lease extension of their existing space and bringing their combined total to over 200,000 square square feet of space expiring in 2041.
That company has further expansion rights as part of their newly amended lease. He also signed a 16 year 39,000 square foot expansion lease with [Nice Serta] at 1,333 Broadway. And we signed the leases for 13 pre-built office suites which total 64,000 square feet.
In the fourth quarter, the average lease duration was 12.3 years excluding early renewals and extensions. And new and renewal leases in our Manhattan office portfolio were signed with an average positive mark to market cash rent spread of 10.8%. We're well positioned for strong performance in 2025, during which our Manhattan office portfolio faces modest lease expirations.
We have only 186,000 square feet of known vacates and 64,000 square feet of undecideds for 2025. We expect that we will see higher overall least percentage in 2025. There are no vacants will be early in this year and could cause our least percentage to dip temporarily at the start of the year.
We anticipate commencement of leases signed previously will lead to steady increased occupancy throughout 2025 to approximately 90% at the midpoint of a guidance range by year end. We have signed 50,000 square feet of leases during the first quarter of 2025 and have a healthy pipeline with 130,000 square feet of leases in negotiation.
With increased occupancy, reduced availability, and improvement in the market, we were able to increase rents and reduce concessions last year, and we will continue that trend and push harder on rents and reduce concessions in 2025.
Lastly, we have $62 million in incremental cash revenue from signed leases not yet commenced and free burn off as shown on page 10 of our supplemental that reflects our leasing success. And with that, I'll turn the call over to Christina.

Christina Chiu

Thanks Tom, we continue to manage our balance sheet in a proactive manner with strong liquidity, no floating rate debt exposure, a well lattered debt maturity schedule, no unaddressed debt maturity until December 2026, and the lowest leverage among all New York City focused rates at 5.3 times net debt to EBITDA as of year end 2024.
Our tax efficient capital recycling diversified ESRT into attractive multi-family assets in Manhattan and prime retail assets in Williamsburg, Brooklyn with better growth profiles and lower cap backs in the years ahead. Over the past year and a half, we established our presence and further scaled our footprint on the prime retail corridor of North 6th Street in Williamsburg with $221 million of acquisitions executed and another $30 million acquisition expected to close in mid-2025.
In a market that has had relatively limited high quality investment opportunities, we are very pleased to execute on these transactions. Our best in class balance sheet is primed to provide operating runway and flexibility to execute on attractive investment opportunities. We actively underwrite deals across all three sectors which we target retail, multi-family, and office with a focus on New York City.
Investment transaction volumes are still not back to historical levels, but in recent months we have seen more transactions come to market from motivated sellers and debt default driven transactions. We will continue to underwrite prudently and be patient to find the right deals which have attractive upside and are additive to our New York City focused portfolio.
Steve will cover our outlook for 2025 in a moment, but I would like to discuss our longer term growth objectives. We expect to drive solid cash flow growth beyond 2025, driven by strong execution in the following areas near completion in our shift from non-core suburban assets towards high quality New York City, multi-family and retail assets with lower cap backs and higher growth prospects in the years ahead.
Our healthy leasing pipeline with solid prospects for higher rents and reduced concessions on new deals due to strong tenant demand and limited availability of top of tier office supply in the market. Favorable mark to market upside in the years ahead as Lisa's role, and we now show on page 7 of the investor deck.
Continued performance of our observatory business and potential NLI upside driven by our new dynamic pricing model and improved visitation. As a reminder, 2024 NOI exceeds pre-pandemic levels of NOI with approximately 74% of the visitors compared to 2019.
Contractual growth expected from the Williamsburg retail acquisitions as NOI ramps up over time, driven by both lease up and mark to market run growth as leases roll over time. Multi-family continues to perform well with solid occupancy and continued rent growth and adds to the resiliency of ESRT's cash flows.
Finally, we are well positioned to do additional deals to enhance our cash flow growth profile in the years ahead. And with that, I'll turn to Steve to discuss our fourth quarter results and outlook for 2025.

Stephen Horn

Yes, Cristina. For the fourth quarter of 2024, we reported core FFO of $0.24 per diluted share. Results for the quarter included approximately $0.01 of non-recurring items, mostly related to credits received against prior year utility expenses which we recognized in other income. For the full year 2024, we reported core FFO of $0.95 per diluted share, or $0.91 when adjusted for the $0.04 of non-recurring items and lease termination income we recognized throughout the year.
Same store property cash NOI was down 2.9% in the fourth quarter year-over-year, primarily due to less benefit by approximately $1.9 million from positive non-recurring items recognized in 2023 and increased operating expenses. When adjusted for the non-recurring items in each period, fourth quarter, same store property cash NOI was roughly flat on a year-over-year basis.
In our observatory business, we generated net operating income of approximately $29 million in the fourth quarter and $100 million for the full year, which reached the high end of our guidance range for 2024 and reflects a 6% year-over-year growth rate.
We generated Fed of approximately $3 million and $0.91 million dollars for the fourth quarter and full year 2024 periods respectively. That was impacted in the fourth quarter from the timing of a $23.5 million dollar disbursement of tenant improvement allowance related to leases signed in 2018 and 2021, excluding the timing impact from this T.I spend fourth quarter and full year 2024 Fed was approximately $27 million and $114 million respectively, resulting in adjusted Fed payout ratios of 36% and 33% respectively.
I'll now move into our guidance for the upcoming year. In 2025, we expect core FFO will range from $0.86 to $0.89. This compares to 2024 adjusted core FFO of $0.91 after the aforementioned exclusion of $0.04 of non-recurring items and lease termination income.
As previewed in our third quarter earnings call, certain items will contribute to the year-over-year decline. First, lower interest income by approximately $0.05, as $195 million of balance sheet cash was used towards retail acquisitions in the second half of 2024 and $220 million of cash should be used to pay down the balance drawn on our revolving credit facility in our Series A senior unsecured note in March 2025. And the assumption of an approximate 125 basis point reduction in the deposit rate applied to our cash.
Second, higher G&A by approximately $0.015 of which is attributed to the accelerated recognition of non-cash stock-based compensation expense of awards granted to employees that are nearing retirement eligibility and related cash bonus elections. The remaining increase is primarily attributed to increased non-cash equity expense related to the 2024 NEO promotions and standard inflation-based payroll increases.
Other key assumptions that are factored into our 2025 guidance are as follows. Adjusted, same store, property, cash, net operating income growth, excluding lease termination fees and non-recurring items recognized in 2024 to range from 0.5% to 4%.
Within this range, we expect positive cash revenue growth, which assumes commercial occupancy of 89% to 91% by year-end 2025, up from 88.6% at year-end 2024, and driven by free rent amortization, and manageable lease expirations in 2025. On the expense side, we expect an approximate 2% to 4% increase in property operating expenses and real estate taxes, which will be partially offset by higher tenant reimbursement income.
While we do not guide to quarterly performance, we do expect a slight skew of same store cash NOI to the back half of 2025 due to the expected timing of cash rent commencements and leases currently in their free rent period.
Of note, we expect an increase in straight line rent in 2025 by approximately $0.015 year-over-year as a portion of our pipeline of signed leases commences but remains in the free rent period. So we will not contribute to same sort of cash and but will contribute to GAAP rental growth.
We expect 2025 Observatory NOI to be approximately $97 million to $102 million. This NOI guidance assumes observatory expenses of approximately $9 million to $10 million per quarter for 2025. Our guidance range accounts for uncertainty around tourism fluctuations and bad weather that could impact results in any given quarter.
With that, we now turn the call back to the operator for the Q&A session, operator.

Question and Answer Session

Operator

(Operator instructions)
Our first questions come from the line of Steve Sakwa, Evercore ISI.

Steve Sakwa

Yeah, thanks. Good afternoon. Maybe Tom, just going back to your comments on leasing, I'm just curious sort of the dynamics and the pull forward of activity and, the discussions you're having with tenants. It seems like you're able to pull deals forward or maybe they're getting a bit anxious about renewals. So maybe just give a little more flavor about the leasing and where ultimately do you think the portfolio settles out on a percent lease basis.

Anthony Malkin

Sure, firstly, we've had a really good run here for with positive absorption over the last three years. We've got a very good pipeline relative to a reduced inventory of available space. As I mentioned earlier in the first quarter, we've already signed 50,000 square feet of leases, and we have about 20 leases in negotiation for another 130,000 square feet.
We've got about 50 active proposals for several 100,000 square feet and it's typical for us in the past week we're seeing interest from tenants from a variety of different industries. Overall, I think that there's a recognition that there's a tightening of the market for the better buildings, which we are. We've had and continue to have strong lea leasing momentum due to our quality product and quality buildings. Work from home is definitely not a factor.
We had the highest leasing volume in 2024 since 2019. We have low tenant move outs this year. The amenities at Empire State Building show great. So I think there's a lot of positive momentum going into 2025. As I look at availabilities out there, I think that clearly the choices for tenants are fewer and fewer for the quality buildings, quality landlords that are modernized, buildings that are modernized have good amenities and good locations and are not hamstrung by some, high leverage.

Steve Sakwa

And and just on the I guess least percentage, Tom like where do you think ultimately the portfolio settles out? Can they get to 95%, 96%?

Anthony Malkin

Yes, as we look at our modest move outs for the year, we only have about for the portfolio 200,000 square feet in New York City, about 185,000 square feet of no move outs. Much of that will happen in the first half of the year, but we're setting ourselves up for coming off of base 94.2% lease in Manhattan. I can see easily us getting above 95% by year end.
There's no reason why we can't get 95% to 96% on the occupancy front. Similarly, we're going to see steady increase in occupancy throughout the year based upon the leases that we've signed previously. And we've given the midpoint of our guidance is 90%, but I can certainly see that higher on an occupancy basis in our Manhattan office portfolio.

Steve Sakwa

Okay, great. Just one question.

Anthony Malkin

I think it's helpful to note, Steve, when you look at these some of these renewals of these a bunch of these early renewals and extensions are with tenants who have expanded as well. So there there is both that the extreme success we have with retention and expansion of tenants and that leads to early renewals and extensions.

Steve Sakwa

I appreciate that, Tony.
Thank you. Just on the observatory, I guess I was a little surprised that, maybe that business is being projected to be sort of flattish, if you will, 25 over 24, and I realized. You're not just going for pure volume that the experience is important. You've done a very good job raising pricing since you've gone to the time ticketing, but just maybe your thoughts around kind of the pricing that's moving forward and maybe where you see the upside, is it more from pricing? Is it more from the visitors going up? Is it less bad weather days? I just would have thought maybe the NOI contribution would have been a little higher next year for '25.

Anthony Malkin

Right, so, it's very early in the year, the low end of our guidance contemplates several macro factors that are not unique to our observatory. There's dollar strength, America is a brand for tourists in Europe is, under some threat. We saw this before, in the prior administration.
We also have an issue of airline seat capacity between China and New York City. In 2019, there were 72 direct flights each week from China to New York City. Now there are 10, and that's remained at 10 for quite some time, and we thought we'd see that number rise in 2024 and it did not.
So when we look at it, we're confident in our ability to work with the attraction and for it to maintain its preeminent position, our net revenue per customer towers over everyone else's in the marketplace, and it's just a matter for us. It's early in the year and of course we look forward to updates as we move forward through the year.

Steve Sakwa

Great. Thanks, Tony. I appreciate those comments.

Operator

Our next questions come from the line of Nick Joseph, Citigroup.

Nicholas Joseph

Hey there, it's Michael Griffin here with Nick.
Appreciate Christina, all your commentary just around the investment and potential acquisition opportunity set and Tony, I know you've talked in the past about being an opportunistic omnivore, so to speak, but as you look at the, what's out there, particularly in the office side and obviously we've seen transactions start to come to market. I mean, does that look more appealing right now, could you find a building that meets your kind of criteria to use the ESRT sort of special redevelopment sauce?
And if you could kind of give us a sense of what kind of yields or IRRs you're underwriting to for prospective transactions, that'd be great.

Anthony Malkin

Well, first of all, let me touch on the second part. It's very important to note that as we said before, the new acquisition application of new dollars is different from the 1,031 like for like replacements that we have done.
So from that perspective, I think we probably on a relative basis have a higher expectation of benefit and return number 1, number 2, We just begin to see now movement on the office front. There's a fair amount of movement that has gone to of what we have seen has gone for Resi conversion from office.
There was a very nice asset on Park Avenue that was was taken on by JPMorgan Chase for itself 250, which we thought would have been very attractive for us. But it's adjacent to their property. I think they wanted to preserve their neighbourhood for their views and what they wanted to do.
So from our perspective it's early, we begin to see now in 2024, really in the fourth quarter, and we begin to see in the first quarter of 2025 more of these defaults by maturity and and the fact that as interest rates are up, the the the property ownership is under pressure. The biggest impact that's had on our business so far is in the haves and have-nots. And it's really made our product much more in demand and has allowed us to increase rent and decrease free rent as tenants become much more selective and really want to negotiate with building owners who are single service partners in the deal. They don't have to talk to the lender as well, and our great balance sheet is very helpful there.
In short, though, as we look at the office piece, we just haven't seen the volumes are significantly below where they were in 2019. If you take out the transfers that are not partial, there's there's a deal on on 6th Avenue right now where it's a partner being taken out by somebody at a fund that wants to get liquidity. It's only partial, it's not controlled. If you start to look at these various moves, there's really nothing that's attracted our attention yet. And we do remain very interested in residential, and we do remain very interested in retail.

Nicholas Joseph

Oh, that's helpful.
That is very helpful. Appreciate all the color there, Tony. And then maybe just one for Tom on the leasing side. Seems like the pipeline is pretty strong for 2025. Have you noticed if, that kind of tenant that might be looking for space?
In the high 90s, low, triple digit sort of rent, is there a big pool of those potential types of tenants looking at, your more affordable price point, maybe moving down the price point curve just given the demand we've seen for eight buildings in the city?

Thomas Durels

Yes, we actually happen to be in negotiation with two tenants. One of them is I call it a household name tenant that you would recognize that is looking at the Empire State Building and relocation and or had looked at some of the newer PAN area product and what we find is tenants like the value that we provide.
The full suite of amenities, the sustainability partnership, and, so we, we're seeing, yes, interest from tenants that that could afford and have looked at much higher price point products and are choosing our our buildings.

Nicholas Joseph

Great, that's it for me thanks for the time.

Operator

Our next questions come from the line of Blaine Heck with Wells Fargo.

Blaine Heck

Great, thanks. Good afternoon. Just to follow up on the investment side, given a kind of tougher time, Tony, you described in finding high yielding office deals and, retail and multi-family, which I'm sure are pretty tight on cap rates, I guess, where do you think stock buybacks rank in your preference for investment given where shares are trading at this point?

Anthony Malkin

I would say that what we always consider that the board always considers that what we are now going to enter into a slightly different aspect of the, I'd say shorter term investment approach where we will look at a business we did very successfully prior to our IPO of offering preferred equity investment on transactions. And we'll probably roll that out in 2025 first half and see what we do there.
It's slightly different from the kind of me originations that a lot of people have done. So from our perspective, we still look at it as a way to put money to work and create more return for our investors rather than at this point at least as we've discussed with the board. Any material shift or forward-looking statement on buybacks.

Blaine Heck

Great, that's interesting. And then shifting gears, can you guys just provide some color around CapEx in 2025? I know you guys don't guide specifically to a FSO, but given that this quarter saw some luminess, it'd be great to hear whether you expect some of that elevated CapEx spending to continue into '25 since you've done so much leasing in the past several quarters.

Stephen Horn

Yeah, so thanks for the question, but when I mentioned in the remarks as far as the elevated 4Q spend, that's a timing issue, so you need to sort of back that out when you're thinking about run rates there's about $23.5 million there and it comes down and then also '24 was a relatively heavier year on leasing spend, so building CapEx TIs. And so, we do expect that overall amount to decrease heading into '25, but a big piece of that decreases from, the exclusion of that one-time item I called out.

Blaine Heck

Got it. Thanks.

Operator

Our next questions come from the line of John Kim, BMO Capital Markets.

John Kim

Thank you. And it's not a very big dollar amount, but your overall rents in the Williamsburg North 6th corridor went down on a rent per square foot basis by $6 versus last quarter. But I was wondering if you could just update us on what you think the mark to market is in that corridor and an update on the existing vacancy at 8,991 North 6th Street.

Anthony Malkin

Sure, thanks. First of all, I would say going into as we underwrote the properties and our acquisition, we forecast about a 30% overall market increase within the better rent roll and then obviously the least of the one vacant space that we have will add to the bottom line coming off no rent that we collect there but the as we have issued proposal, we see the growing momentum and interest on North 6th Street, particularly as we've acquired property there.
There's been even an increased level of interest, and I can see those market markets going higher. Right out of the gate we've got proposals with about a half dozen well known brands that are interested in the one vacant space that we have and so I'm very optimistic on a go forward basis.
And I might add that when, as we look at other transactions on North 6th Street and we see where one was recently done and where there's one underway. Our price of entry looks very, it was smart, I think, as I mentioned, we unfortunately by our actions probably highlighted the op opportunity set for a lot of other people and we look forward to based on the early indications that we have. To a very successful outcome here.

John Kim

Tony, you sort of alluded to it, but the $30 million dollar acquisition that you're looking to close, this year, any commentary on pricing and how you view opportunities to invest there versus multi-family?

Anthony Malkin

I think that look, our process is always let's talk about things once they're done. So we do look to talk about that at the end of the second quarter, and I think t'll just cement further and support what I, what I've said.

John Kim

Okay, I just had a quick question on, some of your large tenants, Macy's and Kohl's in particular, that have announced corporate headcount reductions recently. Does that impact their usage of space or, potentially does that lead them to put some of their space on the selfie market?

Anthony Malkin

Macy's a sublease are space at at 111 West 33rd. So you know that that space is spoken for and won't impact us in any way. Cole still has a remaining lease term, and yet seen as to, but they're out there for they got quite a bit of term left.

John Kim

Okay, thank you.

Operator

Our next questions come from the line of Dylan Burzinski, Green Street.

Dylan Burzinski

Hi, thanks for taking the question. Just wanted to touch on sort of the strong demand environment in New York. Obviously your your guys' portfolio is well leased. One of your peers, mentioned on their earnings call that. There's a potential for possible net effective rent spikes. So just curious sort of how you guys are sort of viewing your ability to be able to continue to push net effective rent growth across the portfolio as you guys continue to push least percentage within the portfolio that is already called north of 90%.

Thomas Durels

Well, as I said earlier, Tony has emphasized, we have raised our rents and reduced free rent concessions throughout last year, and we looked to continue that in 2025. As I mentioned earlier, we had a 13% year-over-year increase in net effect of rents.
And we're setting up well for good net effective rent growth in the coming year based upon lower leasing costs, lower TIs. Much of the leasing that we've done has been for previously built and paid for space, that's either second generation pre-built or spaces that were fully built out for prior tenants, and that's helping to keep a lid in and reduce our go forward tenant installation costs.
So the combination of lower concessions, lower TI, and improvement in rents, I think sets us up well for continued improvement in net effect of rent, and of course just the overall good momentum in the market.

Anthony Malkin

And I would just add to that that look, as tenants leave, we continue to when tenants do leave and even when we do renewals, we continue to see very good upward marks. So if we have a tenant who departs. We're very confident in the demand.
And that would add to additional, upmarks on on the rents, and as far as spike, look, we have continued, as Tom said, good volume, good interest and we're we're doing some some very high rent leases. Each lease we do each quarter we now review on every transaction on everything we've got out there, lease discussions that go on too long. We've already had a handful from '24 where we upped the price.
Because the lease proposal had gone out earlier in the year and where tenants actually accepted the higher price and moved on with their transactions with us.

Dylan Burzinski

Appreciate that detail and I guess just maybe touching on sort of demand across tenant size requirements are you starting to see, larger tenants sort of get more active in terms of in terms of coming to the market and actually wanting to lease space or is it still mostly that small and medium sized user that is really active in the market today?

Anthony Malkin

In terms of tennis, I think, coming to the market sooner, I think that we've seen that as evidenced by the 450,000 square feet of early renewals that we concluded this. This past year and as I said earlier, there is a greater recognition by by tenants that there is a shrinking pool and supply of quality product in quality buildings with good landlords.
And so there is I think a greater sense of anxiousness to execute on leases. In terms of tenant size we see interest from our pre-built to full floors. There's clearly there's a lack of large block availabilities, particularly in the Grand Central area.
Spaces that might otherwise be available or are encumbered by a situation where the landlords cannot transact because the building is going through a recapitalization. And so we have our eyes going down in the future, trying to look at opportunities to create large blocks where we can take advantage of that short supply.

Christina Chiu

Yeah, we would just underscore the demand in New York City is very strong. We happen to be diversified across tenant types and spaces, but that is reflective of overall strength across New York City. And the key commonality is migrating towards high quality assets, what you've heard us say as have.
And those buildings, us and as well as some of the other public New York City owners you're hearing in the comments, that's where they're seeing really good demand and over time there's a shortage of that space because it's not getting replenished as the space is getting leased up anytime soon.

Anthony Malkin

And that's top of tier in every price range. There aren't that many tenants out there who can pay, the $185 to $250 square foot rents that new development today requires. And as those brand new buildings and buildings as their rents move up, our rents move up as well because we remain the frankly attractively priced, modernized, monetized, well located leaders in sustainability, and Great balance sheet landlord and as those prices go up, there are a lot of people who look at us and as we've seen and say, what we want to stay here and grow here or we want to move here. So, we feel like we're in a good position, we really do, and the market in New York is good, we, we're happy with that.

Dylan Burzinski

Perfect appreciate all that detail guys thanks so much.

Operator

We'll now turn the call back over to Anthony Malkin, Chairman and CEO, for some closing remarks.

Anthony Malkin

So again, thanks everybody. We remain focused on our five priorities lease space, sell tickets to the observatory, manage the balance sheet, identify growth opportunities, and achieve our sustainability goals, all for the purpose to create shareholder value. Those of you who keep track of that list will note that identify growth opportunities is a new fifth goal.
We will continue to take advantage of opportunities as they arise and are confident that our ability to execute and drive further value for shareholders going forward remains strong. So we thank everyone for your participation in today's call. We look forward to the chance to meet with many of you at non-deal roadshows, conferences, and property tours in the months ahead and onward and upward.

Operator

Thank you. This does include today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.