Good afternoon. Welcome to Bank of America's 2025 Global Real Estate Conference. I'm Jana Galan, and I cover the office REITs at BofA. We're very pleased to have with us Vornado's President and Chief Financial Officer, Michael Franco, EVP, Office Leasing and Co-Head of Real Estate, Glen Weiss, EVP and Chief CAO, Thomas Sanelli, and SVP, Gary Hansen. I'll turn it over to Vornado to provide some opening remarks, and then we can jump into Q&A.
As we're sitting around here, Jana, I'm realizing that the post-lunch slot is a tough one, so next year, we're going to have to go pre or later, and everybody's probably still eating or waking up. Anyway, nice to be with everybody today. Thanks for joining us. You know, I was reflecting on where we were a year ago. I read what we said a year ago in terms of where I thought New York was and where it was going to be, and I don't know whether you guys thought we were talking in our book or whatnot, but we were pretty bullish about what we were seeing, and we thought the momentum would pick up, and it absolutely has, and we'll talk about that, and frankly, it's accelerating, so we're quite happy about what we've done over the last couple of years.
We can talk about the different items we've executed on. But I think everybody knows our company. We are a New York-centric company, New York City-centric company. We own about 23 million sq ft of office in New York City. The centerpiece of that is the PENN District campus, which, if you've not been over there, I strongly encourage you to go over there. It really is a wow, even for those of us that work on it every day. It's a wow to go over there every day, just teeming with people, unique infrastructure in terms of amenities, an entire ecosystem. And I think that's really hit the tipping point with tenants and brokers and what you're seeing come through in results. We own franchise assets in Chicago and San Francisco. We own the best retail in the city, Fifth Avenue, Times Square. We own the premier signage.
Frankly, it's a portfolio, but it'd be bigger than any other signage company out there in terms of spectacular signs, which I think is underappreciated. And we've got great running room ahead, both in terms of the existing portfolio as well as some of the development opportunities. So we are, I think, I speak for the entire team, as excited as we have been in years. As I was talking with a couple of folks over here, we had three years in the wilderness, and it's gotten better and better over the last 18 months. And I think we're embarking on one of the strongest periods for New York City office we will have seen, certainly in my career. So with that, I'll turn it over to you for Q&A, unless you guys want to add anything.
Great. Maybe seeing this kind of strength and momentum and demand in New York City. I think yesterday we heard from Ken Caplan that office utilization and traffic is above 2019 levels. And so definitely sounds like New York's come back stronger than ever. Maybe from Glen's perspective, can you kind of talk about leasing volume, what you're tracking, what expectations are, kind of what the pipeline looks like today?
Sure. Hi, everybody. So we're feeling great. Stuart was joking around with me that I'm smiling for once.
Ted mentioned my tone on last earnings call was very positive. So yes, we are positive. New York's in fifth gear. We're in fifth gear. Leasing is crazy. I should honestly not be here right now, no offense to any of you. So I'm going to run out of here as soon as we're done. But what happened here is everyone was home in 2020. We had no idea what was going to happen. We had been predicting that everyone's going to get off their seats out of their kitchen eventually. And that certainly has happened in a big way. So you have a combination of everyone's back in the office in New York. Everyone, the talent, is in New York. The kids all want to be in New York, not Nashville, not Denver, not Atlanta, New York.
You now have growth in industries, hiring expansions, tech, law, financial, et cetera. On top of that, you have the flight to quality, which continues to strengthen. But with that, because demand is becoming so robust into this landlord's market, some of the non-trophy space, I'll even say the Class B space, is filling up now. Because not everybody could spend $100, $150, or $200 a sq ft on their real estate. So you're seeing those Class B buildings starting to fill at $70, $80 a sq ft, which is great. We're seeing competition between companies for the same space all over the portfolio right now, particularly in PENN. Our pipeline's robust. Year- to- date, through June 30, we had leased 2.3 million sq ft. We have another 1.5 million sq ft right now in the pipeline.
A bulk of that is in lease negotiation documents, lease documents, and the remainder in some stage of LOI across the entire portfolio, very balanced between PENN and our core Midtown portfolio. So we're feeling very, very good. We continue to raise rents. And we're finding that we're able to start whacking down the free rent packages, which we're doing daily. TI, not yet, but that's soon to come as vacancy continues to drop in Manhattan. So we expect this to continue in a very big way for the rest of this year and certainly through 2026. We feel great. We have a very modest role. The rest of this year, we have nothing left to 100,000 ft. Next year, we have about a million feet rolling, of which most of it's already in discussion. So we have a modest role. We feel great about our role.
Our vacancies are filling. So overall, yes, we're smiling.
Maybe if you could kind of talk to us a little bit about the different types of tenant demand, whether it's AI, TAMI, FIRE, broad-based, anything that you'd want to call out that's different this time.
AI certainly is coming to New York and, of course, San Francisco. I think moreover, look out for the Big Tech. They're coming back. They're here. They kind of went in a hole for a while, but they're back. So pay attention to Big Tech again. Financial is just off the charts, off the charts. Entertainment is big, which people haven't been talking a lot about. In New York, entertainment's a big driver of this demand right now. You think about these companies, the culture and their recruitment and the brand. Look what Verizon did, for example, at PENN 2. I mean, they came out of nowhere. They weren't even in the market. And they called us on like June 10th, literally June 10th, with an idea. And we signed the lease, what was it, July 24th.
With leases all over the city, they said, "We have to move." So those are great signs because that was not happening. Prior to this uptick that I've been describing, "Oh, my lease comes up in 2028. What do you think? It's three years away. Will you take care of my free rent so I don't have two leases?" And now it's, "I need the space. What do you got?" So we're seeing that a lot more now, which is great. So it feels like the old days, so to speak. But I would say it's a very good balance of industries in the market. I'd say the only industry who's been slow still is the advertising companies. But otherwise, everyone else is in lease mode.
Which is, I think, pretty unique, right? Sometimes it's finance, it's legal, whatnot. I would say we're at a time where, by and large, pretty much every major industry group is in growth mode and serious growth mode to the point where, and I would say particularly in the finance sector, they are concerned about, as they look at their growth objectives and growth needs, their concerns as they look five to seven years out, right? We need to lock up space for what we think we're going to need, what we need today, what we may need in the future. And so that's a pretty encouraging sign. But I think the broad-based nature of the demand, I think, is a big positive.
And then the second big positive is not that many years ago, we'd talk about how many triple-digit leases there were, and getting above $100 was a big deal. And it just feels like in the last, I don't know, 24 months, Glen, just a step function where it doesn't matter anymore. I'm not saying tenants don't care what they pay. Of course, they do. But they are much more willing to pay an extra $50 a foot for the right space, right? Culture, retention, recruitment is so critical that if they have to pay $230 versus a building $140, but it's not, don't even think about it, right? And the JPMorgan headquarters opened up, I guess, officially yesterday. We toured it a month ago. And that just raised the bar on every bank out there, right?
So I don't care if you've renovated your headquarters, you built one 10 years ago, you're now a laggard relative to JPMorgan, right? And when you're going to compete for that talent, right, you're going to have to improve your own bit, no offense to BofA there, right? You're going to have to do things that you hadn't thought about before. And so extrapolate that across the entire finance sector in particular. You're seeing that across legal. And again, I think our comments are heavily focused on New York, which far and away is the best performing office market, right? We're in other markets, Chicago, San Francisco, San Francisco better than Chicago in its performance, but neither one of those. And I think we've spent some time in other markets. Nothing's close to Manhattan in terms of what we're describing right now.
Yeah, and I think it's important to note the quality of our portfolio. I mean, I don't think anyone focuses really on our quarterly metrics, pound for pound every quarter consistently for a long time now. $100 rents on average almost every quarter. Look at the stats. Mark-to-market's positive every quarter, and that's because of the quality of the spaces that we have, PENN or not PENN. It's quarter- to- quarter- to- quarter, and that speaks to the quality of the portfolio we put together.
Maybe following up on PENN 2 and Verizon, you guys had put out kind of a target occupancy in the future. But also, I completely understand why you'd want to curate the space and make sure with a long-term lease that you have the right tenant there. Just kind of how are you thinking about that?
So I think that comment was taken a little out of context on the earnings call. By no means was saying, "Oh, we're going to delay this thing." Obviously, we want to lease the building, but we want to be smart about it. So what's happened here as we've unfurled the project in the district, as the construction barricades went away, as everything is now perfect, the rents have risen, the quality of tenants has strengthened, the credit of those tenants have strengthened. So when I say curate, that's what it's about. So we have Verizon. We have Universal Music. We have leases out otherwise now that everyone's going to be very happy with soon. What's that?
I was going to say Major League Soccer.
Yeah, Major League Soccer. So when I say curate, we feel like the balance of rent, credit, tenant profiles are really important here. And if you look at the roster so far, it's exactly what we've done. So we're really pleased with it.
So just to put a fine point on it, yes, we did put a number out there. We said, "Give or take." We weren't trying to say we're delaying. At the same time, we weren't trying to just lease for the sake of leasing. I think that's a Vornado hallmark, right? We don't put a number out there, and boy, if we don't hit it, we're going to fall on ourselves. If we're at 77% and we get to 80% in February 1, we're going to wait for the right deal. That's all we're saying, right? All that being said, the demand for PENN 2 is outstanding. We have a deep roster of interest. Glen is in the process of finalizing leases with a number of tenants. We feel very good about hitting the 80%. Could do better. Don't take that to the bank.
But we feel good about the 80%. We feel good about leasing overall. And I think as we sit here today, knock on wood, relatively published in our last supplement, hopefully, we're going to exceed those targeted yields.
Can you help us a little bit in terms of when you start getting rent for the different chunks of?
We're just talking about that. The answer is we can't give that to you. We're still working with tenants on when they're finalizing the build. I don't know if you want to comment at all. Some tenants have been there. They're actually using the amenities before they're in their space, right? Because that's the uniqueness of it. And they're telling their teams, "Get this thing built out quicker. We want to be in this space." So we're trying to assess exactly when we're going to start.
Yeah. It's going to depend on when the space is ready for its intended use, obviously, when the TI dollars are spent for GAAP purposes. So we're going to reevaluate that given all the activity we have. So we had initially said it's probably sometime in 2027, early 2027, but it may actually be in later 2026. But we have to kind of go through all that as we go through this next year's budget and with the new leases that we've signed. But in terms of a full year, it's going to be in 2027.
Thank you. And then maybe just like on the other end, just any kind of large expirations or move-outs to kind of call out?
I said in the beginning, we have a modest rollover. We've already attacked substantially the roll 2025, 2026. We're already talking to people in 2027, as you would expect. So I would expect nothing that you don't know about already. But we feel great about the roll now. We've gotten through. We had a bulge from 2023 to 2025 of huge roll. Huge. We've now come up very well out of the other side. So now, in the next couple of years, very modest, very manageable. And as I said, we've attacked it, and we're in deep negotiation with many of the big ones that are expiring.
Great.
Question on JPMorgan getting up there at the headquarters. What does it mean on supply side? Not an issue at all.
Not an issue at all.
Yeah. If you think about there, I think when they first announced that they started when?
27 years ago.
Yeah. Yeah. They took space in what, six other buildings, right? With the expectation when it was completed, they would take that space out and not use it anymore, right? Their business has grown substantially since then. And on a number of those, they've committed to longer-term tenancies in those locations, right? So I don't think any of that space is really going to hit the market again. And they just bought 250 Park. They're kicking tenants out of that, right? So they can utilize that. We and others are the beneficiaries of some of those tenants, which is a good thing. So I mean, I think that's the biggest bank, but that's a strong statement that their new headquarters is not big enough for their footprint now, right? So they've now built a campus between that, 383 Madison, 250 Park, and some of the adjacent space that they're keeping.
That's on the lawyer's end. AI seems to be a big threat for law firms in the future. But still, they are high demand.
True.
They are rich there or something.
Yeah. I think we'd be naive to think there's not a risk, frankly, on everything related to AI, right? And it could impact certain businesses. And I think they are utilizing it to some extent, right? In terms of they're not having two second-year associates produce a contract, right? They can get done like this, right? Here are the 10 key terms and so on. At the same time, we've had some of this discussion with our main law firm. If you don't continue to hire and restock your junior people, then there are no partners one day. So there's a balance, right? And so I think you'll see a level of efficiency adopted by them, by others, but net-net, I think I'll call it the intellectual capital that's necessary, right? Whether it's finance, legal, etc., is still going to be people-oriented.
Their view is they're going to still be there and they're going to be active. They've been pretty active recently at taking space and including expansion space in that. Yeah, I think there'll be efficiencies, but it's not going to eradicate the legal industry.
Maybe turning to the balance sheet, you guys have significantly delivered this year. Just maybe if you could kind of remind us, what are your target metrics, and you've also mentioned some potential dispositions.
Yeah. Look, we feel very good about where the balance sheet is. I mean, I think that, one, we've always sort of carried more cash than most companies, right? And that's allowed us to weather any storm. It certainly allowed us to do it in this recent storm. We sleep well at night. But if you look at all the transactions we've executed, it's Uniqlo, 770, some of the smaller sales. We brought our leverage down about a turn and a half, right? I think we were about 8.8 at the peak n et debt-to-EBITDA. W e're at 7.2 today, which in New York probably makes us the second lowest levered office company. And I think in the sector, also one of the lower levered companies.
I don't know that we have a specific target, Jana, but I think we've stated a number of times our objective is we want to be an investment-grade company again, right? So that naturally lends itself to even lower levels than that. And I think we're going to get there principally through when we finish leasing up PENN and that comes online. That's going to be a pretty meaningful impact to income. And therefore, our leverage level is going to come down, we think, again, probably at least a turn by 2027. So hopefully, that positions us pretty well by then. We don't sit around and say we have to be at this exact number, but we do want to be investment-grade. And I think the agencies are recognizing the trend line. I think one agency came out with a.
Positive.
Release. Was it this morning or yesterday? They reaffirmed our rating, but they put us on positive outlook, right? So that's the first step towards that. I think we have a track record with the agencies of being transparent, putting out a set of objectives, not over-promising, delivering. And I think they looked at us with some skepticism two, three years ago. We said we're going to get things like 770, Uniqlo, and all that done. I said, "Well, who are you going to do these things with?" Market's is still coming back, and we got those done and leased up PENN. So I think we've got a lot of credibility in the agencies, and I think that's reflected in what they put out, as I said, in the last day. And so I think a lot of it will just come through natural income growth.
But at the same time, we're always looking to optimize the portfolio. And we're working on a couple of smaller dispositions right now. And there might be something more medium-sized. But our approach on dispositions has been very much of an opportunistic approach. I think the market's shifting now. We can talk about that. But up until now, you sort of had to figure out who's the right buyer or handful of buyers that are likely because there weren't that many that could actually perform and go to them, and you figure out something. I think that's widening now. And there's a lot more competition for assets on the buyer's side.
But we're going to continue to be opportunistic there, continue to try to use this as an opportunity to upgrade the portfolio, recycle in the higher-quality assets, which is basically the trend line we've been on for the last few years.
Great. And maybe just following up on the 555 California and the Mart comments on the earnings call, I guess, level of recent inquiries or anything to it?
I guess Steve got his wish. He put a little bait in the water. So it's not really he got a lot of press, particularly in Chicago. What he said, frankly, is not any different than I think he put in the last two chairman's letters or said a number of times, right? Which is our focus is New York. We own great assets. But if there's an opportunity to monetize those assets outside of New York at prices that we think are attractive, then we're open to doing so, right? And that's the case, right? If we, 555 is probably a top 10 building in the country, right? We want to get paid like it. If we get paid like it's a top 10 building in the country and somebody wants to own a franchise asset, then that's something we're open to doing, right?
Chicago, it's a franchise asset, but the market's not as strong. It's not a top 10 building in the country, but it's a great asset. Again, if we get paid appropriately, we're open to selling it. We're not actively in the market. We're not hiring a broker. We're not doing anything. But we're open for business. They're big assets, right? There's not that many players that can stroke that check, but there are quite a few. And for the right execution, we'll transact, right? And Steve was reemphasizing that, and that remains the case. And I wouldn't model it in your models anywhere, but could it happen? 100%. So we'll listen to calls. And if there's somebody that's serious and willing to get aggressive, then we're open to doing something.
Thank you, and then maybe on kind of the acquisition side, things that you guys have been looking at, and it seems like financing has really come back, and so transaction activity is likely to follow.
Yeah. The transaction market has certainly picked up this year. I think if you look at just the last few months at some of the deals that have been announced, first of all, the size of those deals is quite a bit larger, right? We've seen the first $1 billion transaction, 100% sale. We've seen investments from private capital. I'll call it the fund type. We've seen private capital from the pension fund type. We've seen the high net worth family office type. I would say it's broadened quite a bit in terms of level of interest. And we get inquiries on assets, whether we're selling, whether we're looking at assets in the marketplace in terms of partnering. And that market, in terms of investor level of interest in New York, is deepened quite a bit.
So I think that's reflective of I think it's the consensus view that New York has clearly bottomed and in a recovery mode. And now it's just a question of how aggressive are you going to get in underwriting that recovery, right? So whereas that's not necessarily the case in every other market. And so I think that's why you're seeing investment capital that's interested in office, and frankly, all return levels focus heavily on New York City. So I think the level of capital on the equity side has increased dramatically. The debt markets have come back significantly for New York City assets, certainly for stabilized assets. I think the spreads are as tight as we've seen in a number of years. I think the depth of the market's good. For the more transitional assets, there's capital available for that too from all the non-bank lenders.
I think the capital markets are strong and getting quite a bit stronger in New York City. I think that's resulting in more transaction activity, right? For a while, owners were either holding out because they could, and maybe they can't now because they have loans maturing. Maybe lenders didn't want to force the action because the market was uncertain. Now they know there's capital out there. You're saying lenders put a little bit more pressure on their borrowers of like, "Let's get on with the game," right? "Let's see a recap. Let's see a sale," whatnot. I think that's precipitated a lot of this. I think that's going to precipitate a lot more. Obviously, you guys saw us make an announcement a couple of weeks ago, and then we made an announcement yesterday that we closed on 623 Fifth Avenue.
That was a situation clearly that was driven by an owner who was under some pressure, right? And it's exactly the type of asset we want to buy, right? We're not Vornado's never. We're not in the pie-eating business, right? We're not trying to buy everything. That's it. We're very targeted. We want to buy assets where we think when it comes to reimagining, repositioning, leasing up assets, and making an asset that is an ugly duckling into a diamond, nobody does it better than us, right? And you can look at all the track record that Glen, Barry, Chuck , Steve, nobody is better at that than us. PENN is, I think, the case study, right? So 623 is a perfect example. Off the radar screen of brokers, tenants, been vacated proactively by the owner. And it's just sort of sitting there, right? Heart of Midtown.
But you get up in there, the views are spectacular. Column-free space, boutique floors. But the heritage was it was high-end financial tenants. We're going to take all the skills, right? We're going to make it a club-like environment. And it's going to be chock full of top-tier financial tenants at, I think, very high rates. So we're excited about it. It's right down the fairway of what we do best. And we're looking for other opportunities like that. I think you'll see. But I think there's going to be a tremendous number now because capital is competitive here. A lot of assets are in strong hands, and the weaker assets that are poorly performing are not assets we want to own in a lot of cases. But we've seen more in the last four months than we saw in the last three years.
I think there'll be some more activity.
What sort of return do you think we get on that?
I knew somebody would ask that. Give us a little time to refine it, Ted. I think something else published, what did they say? Seven, seven and a half?
Mm-hmm.
Yeah. I think we'll do better, but let's leave that out there for now. When we finalize the budget shortly, w e'll give you the numbers.
We're drawing up our plans now.
We feel very good about what we can achieve there.
I will tell you, this building has been so off the radar.
The reaction to that.
I mean, we announced this thing three Fridays ago.
End of August.
We have more than 30 tours set up for the next two weeks. It's one of those buildings that everyone was so excited to see it come to us. I was shocked by it. We love the real estate, as Michael said, but I didn't have a feel for how much the market was salivating for this thing to come back. It was interesting. Merrill Lynch used to have a big block in this building, by the way, to his point of financial. This was the original Swiss Bank Tower. So the building has great bones. The views, I mean, so we love it. But so the reception's been monumental, much even better than I thought it'd be out of the gate. Yeah.
Can I ask how are you thinking about those types of unique opportunities versus starting development at kind of the PENN site?
Yeah. The answer is we're going to do both, right? Now, we certainly compare opportunity. Okay, how does this compare to we look at everything, right? Should we buy back stock? Should we pay down debt? Should we develop? Should we just keep it in cash? All those things, and it's why you haven't seen us buy a tremendous amount because we don't want to buy just to buy, right? It's got to be the right opportunity, but on the development side, we have a number of things in the works. I think clearly, as we think about our company and where there's going to be growth, how are we going to create value? PENN is the centerpiece, and I think one of the great things about what we do there is because it is a 10 million sq ft campus, everything's interconnected.
Every time we do something in that district, it enhances the district, right? So when we do something, that's got a knock-on effect the next time we roll a lease at PENN 1 or PENN 2 or something. So we think there's a lot more rent to capture in PENN 1, PENN 2, notwithstanding the success we've had leasing those up because for the bulk of it until probably the beginning of this year, we were in prove-it-to-me-mode, right? Is this district really changing, right? I don't think that is questioned anymore. But the reality is we had to lease up, which hit our targets and exceeded our targets, but we had to prove it to people, right? I think those rents as we roll will be much higher and a lot of growth to come over the number of years from that.
At the same time, we're intent on adding residential. We've talked to Steve about it. I talked about building on our 34th and 8th site of residential project, which we're finalizing our plans and budget and probably get going on that at the end of 2026. Hotel Pennsylvania, which is down. I would say for the first time, seriously, I think it's the best remaining site, certainly on the west side. Tenants, given that frankly, their expansion mode and their view on New York City, they are looking out in the future, and we're, I'd say, getting a regular amount of interest on PENN 15. We're not ready to kick off tomorrow, but I'd say for the first time, there's a level of seriousness towards the activity.
It's now formal activity. Not, "Hey, Glen, maybe. What do you think?" It's formal. So it makes a difference because people believe now, companies believe. So we're showing it a lot at our presentation today, actually, later today with a big company. We're involved with some RFP processes right now. So we're front and center in this thing. It's not just kind of make-believe.
I can't tell you if any of those will make, right? But as Glen said, there's a level of seriousness.
It's a different tone in there.
It's a different tone on it now. So at some point, we will make the right deal. We'll get going. And we think that endures to the district. So very much everything we do in PENN endures the entire district. We want to keep building that out. 350 Park is front and center. I mean, interesting there. Notwithstanding, we're not going to deliver till 2031, 2032, right? Glen's getting incomings to take the vacancy there. We're going to have final ULURP approval by the end of this year and demolition to start on the existing building by March. So that'll start that process.
Great. I think we may have time for one or two questions. Maybe if I could just ask on the Pier 94 Studio development, that's kind of very unique. Anything to kind of add there?
Take that one.
It's going to finalize open by the end of the year. It's spectacular. There's nothing like it in the country. I mean, these sound stages that we put together with our partners at HPP and Blackstone, it's great. We're in the market. That market is soft nationally, but this thing's so special. If anyone's looking at anything, it's this right now. So we would expect for maybe one or two years to take down the entire complex. If we have to pivot to kind of the normal sound stage, weekly, monthly, annual business, we do that too. We're going to be patient because it's just that good. The location's fronted on right off the West Side Highway, on the river, exterior signage, parking. I mean, the thing has everything you would want. So we're excited about it.
But at the same time, we realize that that sector is so off in terms of demand. But this is so special. We're still feeling very good about what we did here.
Then maybe just finally, any comments on kind of the upcoming mayoral election?
Every day brings a new story, right? So I don't want to make predictions. There's enough out there. I think our view in terms of our business is the infrastructure of New York City is so deep and differentiated from any other city that the city is going to be fine no matter who wins. It always has been. It will be. This is not going to become the next Chicago in terms of what's happened there with some of the crime and safety issues. That's a 40-year issue. So regardless of who wins, I think every candidate we've met with all the candidates, they all recognize that you need to have a strong business environment, right? Obviously, Mamdani's got a big focus on affordability, which probably is not inappropriate, right? We need to have affordable housing and so on.
But I think he also recognized the importance of the strong business environment and keeping the city safe and clean. So I think New York will be fine. I think sort of the proof is in the pudding in the sense of, did we see any reaction from tenants? Have we lost any deals post-primary? Zero, right? Have any tenants slowed down? No. Glen and his team probably had the busiest summer they've had in a decade, right? Are we seeing any slowdown? Zero slowdown, right? Everybody understands who might win the mayoral election, not affecting people committing the shorter terms, no. So forget what we say. Let's just look at how are the tenants voting? What are they doing?
Thank you. We're going to conclude with three rapid-fire questions. We're asking all the REITs at the conference. When the Fed starts to cut, do you expect rates for long-term debt to decline, stay flat, or rise?
I'd say generally stay flat.
Last year, the majority of companies stated they're ramping up spending on AI initiatives. How would you characterize your plans over the next year? Spend more, flat, or less?
Definitely more because we're coming off a very low base.
We spend nothing.
You're off a very low base. But in all seriousness, we have Tom and his team we have is spending a lot of time focused on how do we incorporate that into our business.
Then do you believe same-store NOI for your sector will be higher, lower, or the same next year?
Sector, I don't know.
For the sector.
I mean, in general, I think New York is positive. I can't tell you for the sector, but trend line is positive.
That's great. Thank you, guys.
Thank you.