Vornado Realty Trust Expands Manhattan Portfolio with $218M Acquisition

Vornado Realty Trust (VNO) has acquired the office condominium at 623 Fifth Avenue for $218 million, expanding its Manhattan portfolio. Analysts predict a slight upside of 1.98% from the current price of $38.08, with an average target price of $38.83. However, GuruFocus estimates suggest a potential downside of 32.64% based on its GF Value estimate of $25.65. The overall brokerage recommendation is a "Hold."

Vornado Realty Trust (VNO) has recently acquired the office condominium at 623 Fifth Avenue in Manhattan for $218 million, expanding its portfolio in the city. The acquisition is a significant move in the current office market landscape, which has seen a resurgence in demand for top-tier office space in Manhattan.

The 382,500-square-foot office, located above the iconic Saks Fifth Avenue department store, was previously considered for conversion into apartments due to the surplus of outdated office space. However, Vornado's plans to retain the property's office use and upgrade it reflect the current recovery in New York City's office market [1].

The acquisition comes as leasing activity in Manhattan has surged, with tenants signing on for more than 16 million square feet between January and June of 2025, compared to about 15 million each year between 2016 and 2019 [1]. This increase in demand has positioned Manhattan's office market well ahead of the national recovery.

Vornado's plans to upgrade the property align with its broader strategy to focus on its Manhattan office portfolio. The company has recently indicated that it is open to selling off its 555 California St. tower in downtown San Francisco and the Mart in Chicago, a move that would simplify its portfolio to become a New York-only real estate firm [1].

Analysts predict a slight upside of 1.98% from the current price of $38.08, with an average target price of $38.83. However, GuruFocus estimates suggest a potential downside of 32.64% based on its GF Value estimate of $25.65. The overall brokerage recommendation is a "Hold" [2].

The acquisition is expected to close next month, and Vornado intends to kick off an extensive capital improvement plan to upgrade and reposition the building. The condominium portion of the 623 Fifth Ave. building is about 75% vacant, but Vornado's redevelopment plans will remake it into a "boutique office building" that more closely aligns with the REIT's other nearby properties [1].

References:
[1] https://www.costar.com/article/324493342/vornado-swoops-in-to-preserve-iconic-manhattan-office-once-considered-for-apartment-conversion
[2] https://www.gurufocus.com/stock/VNO