Share prices for some of the largest office landlords have dropped to near historic lows, reflecting a sluggish return-to-office rate and a rise in the number of investors betting that these stocks will keep falling, The Wall Street Journal reported. SL Green’s share price closed at $22.54, which is barely above the New York office firm’s 1997 initial-public-offering price and a fraction of its post-global-financial-crisis peak of more than $140 in 2015. Vornado Realty Trust, which owns marquee office buildings in San Francisco, Chicago and New York, closed at $13.13 a share. Vornado’s share price topped $67 as recently as 2020. Both Vornado and SL Green shares are down more than 30% so far this year, while the broader stock market is higher. “We’ve all seen office stocks being crushed and great concern about the future viability of office,” said Vornado Chief Executive Steven Roth. Although he expressed confidence that more employees are returning to the office, the company also said that it was suspending dividends for the rest of 2023. Most other office real-estate investment trusts are also under selling pressure from soaring vacancies and declining rents. The return of employees to offices showed signs of a rebound earlier this year, but it has stalled at roughly 50% of pre-pandemic usage levels. Leasing activity for office REITs fell 20% on average in the first quarter compared with a year earlier, according to Green Street. Even when they do sign new leases, many companies are taking less space than before because many employees are working from home part of the week. Other firms are flooding the sublease market with unwanted workspace as they brace for a slowing economy and the prospect of laying off workers. Before the COVID-19 pandemic, one of the strongest sources of growth in the office market were technology companies that took more space than they needed in anticipation of growth. But those kinds of deals are off the table, and high interest rates also pose a problem.
