Yahoo Finance SL Green (SLG) Inks Lease With Palo Alto at One Madison Avenue
SL Green Realty Corp. SLG recently signed a long-term lease covering an entire tower floor at its One Madison Avenue with Palo Alto Networks, a leader in global cybersecurity. The move reflects the decent demand for SLG’s high-quality and well-amenetized office properties.
With this lease, SL Green’s signed office leasing volume for 2023 totaled 491,913 square feet. Moreover, the company’s office leasing pipeline increased to more than 1 million square feet from 700,000 square feet within just three weeks.
The transformational development at One Madison Avenue, spanning 1.4 million square feet, is scheduled to be completed in October 2023 and is 59% leased at present. As part of this development, One Madison Avenue will combine the elegance of the existing limestone building with more than 500,000 square feet of new, virtually column-free construction.
Per Steven Durels, SL Green’s executive vice president, director of leasing and real property, “The building’s continued leasing momentum is indicative of high performing companies’ ongoing desire for high-quality, centrally-located, collaborative office space.”
With state-of-the-art infrastructure, forward-thinking amenities and a cutting-edge healthy work environment, the property is set to provide the highest standard for the present-day workplace. This is expected to help attract more tenants at Manhattan’s largest office landlord’s property, poising it well for growth.
One Madison Avenue will feature a spectacular 10,000 square feet roof deck with lush landscaping, a 7,000 square feet tenant-only amenity space, an upscale French steakhouse and artisanal European style market operated by Michelin-starred Chef Daniel Boulud, and a 54,000 square feet Chelsea Piers Fitness club.
The flight-to-quality preference of office tenants has been aiding SL Green’s leasing activity for its premier office properties located mainly in the high-barrier-to-entry real estate market of New York. During the fourth quarter of 2022, it signed 33 office leases for its Manhattan portfolio encompassing 196,421 square feet.
Moreover, SLG’s opportunistic investment policy and solid balance-sheet strength position it well to capitalize on long-term growth opportunities.
Nonetheless, a choppy office market environment could soften the demand for the company’s properties, hurting leasing volume in the near term. Also, the elevated supply of office properties in certain markets adds to the company’s concerns.
Rising interest rates are likely to increase borrowing costs, affecting SLG’s ability to purchase or develop real estate.
Shares of this Zacks Rank #3 (Hold) company have lost 38.8% in the past three months, underperforming its industry’s decline of 4.1%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Alexandria Real Estate Equities ARE and Terreno Realty TRNO, each currently carrying a Zacks Rank #2 (Buy), and Service Properties Trust SVC, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Alexandria Real Estate’s 2023 FFO per share is pegged at $8.95.
The Zacks Consensus Estimate for Terreno Realty’s current-year FFO per share stands at $2.17.
The Zacks Consensus Estimate for Service Properties Trust’s 2023 FFO per share is pegged at $1.89.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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