SL Green Shares Slide as CEO Sees NYC Job Creation Slowing

  • Stock drops 8.1% after Holliday's comments on earnings call
  • Offices still strong compared to historic averages, CEO says

SL Green Realty Corp. slipped 8.1 percent, its biggest decline in four and a half years, after Chief Executive Officer Marc Holliday said he expects job creation in New York to soften, affecting office demand in the city.

SL Green, the largest owner of New York office buildings, making its stock a barometer on the city’s office market, was the worst performer in the 22-company Bloomberg Real Estate Investment Trust Office Property Index, which fell 2.7 percent Thursday. SL Green shares closed at $93.42 after their largest drop since August 2011.

“We expect to see a bit of a rollback in job creation for the first time in the past four or five years in New York City,” Holliday said on the company’s earnings conference call Thursday. “In turn, that will have an impact on leasing velocities, which we do expect to begin to slow sometime in the second half of the year.”

While there were 1.35 million people working in office jobs in Manhattan at the end of last year, the most ever, fewer square feet were in use than in 2001, the last time employment was even close to the current level, according to data from Cushman & Wakefield Inc. New York office job growth should remain strong compared to historical averages, Holliday said.

“We still feel very good about where we stand,” with the company expecting to lease 2 million square feet (186,000 square meters) this year, he said. Steven Durels, SL Green’s director of leasing, said on the conference call that a slowdown has yet to show up in the company’s leasing this year or in its discussions with current or prospective tenants.

Holliday also told investors and analysts on the call that Citigroup Inc.’s decision to exercise an option to buy back its 388-390 Greenwich St. complex for $2 billion in December 2017 -- an agreement announced Wednesday, when SL Green reported its fourth-quarter results -- was expected and already part of its capital plan.

Citigroup this week established the Tribeca property as its global headquarters, spokesman Kamran Mumtaz said in an e-mail Thursday. Acquiring the property “will result in significant cost savings,” he said. The company is “in the process of modernizing and unifying the buildings.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE