The impact of the decline in international tourism to New York City since President Donald Trump took office is beginning to affect the finances of Empire State Realty Trust (ESRT). The Real Estate Investment Trust (REIT) reported Funds from Operations (FFO) of USD 57 million, or 21 cents per share, for the second quarter. This represents a loss of USD 25.8 million, or 15 cents per share, compared to the same period last year.
ESRT largely attributed the loss to a “massive” non-cash impairment of USD 166.11 million. This is related to below-average visitor numbers at the Empire State Building’s observation deck, resulting from continued declines in international tourists to the metropolis. The observation deck generated a net income of USD 12.4 million in the first quarter, representing a sharp decrease of 48.5 percent compared to USD 24.1 million in the same period of 2025. Visitor numbers for the observation deck totalled 450,000 this quarter, a 28.5 percent decrease year-on-year.
In addition to the decline in international visitors to the US, ESRT also attributed the drop in profit to reduced use of third-party pass programmes, which are used for tourist attractions in New York. Such passes are often utilised by budget-conscious international travellers. Anthony Malkin, CEO of ESRT, commented during the company's conference call that while all attractions had experienced a decline in visitors in 2026, ESRT's decline was greater. This was due to the company's previous dominance in pass programmes and its international presence. Malkin noted that the lower visitor numbers continued throughout the second quarter.
Forecasts for reduced observation deck visits prompted ESRT to lower its assumptions for core FFO in 2026 to a range of 75 cents to 79 cents per share, compared to 85 cents to 89 cents per share FFO in February. Malkin explained that historically, over 60 percent of the Empire State Building observation deck’s visitor traffic came from international travellers. This figure shifted to 40 percent last week, when the second-highest visitor numbers of 2026 were recorded. According to Malkin, the FIFA World Cup did not lead to an increase in observation deck visits; he rather saw it as a distraction.
Despite the challenges in the tourism business, ESRT achieved a turnover of USD 196.9 million in the second quarter, a slight increase from USD 191.3 million in the previous year. The REIT recorded gains in its office portfolio, with its 20th consecutive quarter of positive leasing spreads and the signing of leases for 363,968 rentable square feet. The entire commercial portfolio was 94.9 percent leased at the end of the second quarter, an increase from 93.8 percent in the prior quarter. New leasing was significantly shaped by a new, 16-year lease for 100,948 square feet with United Talent Agency at the Empire State Building.
Ryan Kass, Executive Vice President, Co-Head of Real Estate and Chief Revenue Officer at ESRT, announced that an entire floor in the Empire State Building is now available for lease. ESRT intends to increase rents there. Kass added that ESRT currently has a “healthy” pipeline of 200,000 square feet of lease negotiations. Demand continues to focus on high-quality, modernised, amenity-rich, well-located buildings owned by well-capitalised landlords with proven operating structures. The leasing market in New York City remains stable and offers a favourable environment for deals, with broad demand across finance, professional services, TAMI (Technology, Advertising, Media, and Information), and consumer goods.
The company was also active on the transaction side in the second quarter, including the disposal of 250 West 57th Street for USD 275 million, with Namdar Realty Group assuming mortgage debt of USD 180 million for the 26-storey office building. ESRT also acquired land under 111 West 33rd Street and 1400 Broadway for a total of USD 110 million. In terms of debt, ESRT closed an unsecured, deferred term loan of USD 245 million during the quarter, maturing in 2032. The REIT expects to use the proceeds from this loan in January 2027 to repay existing debt. Christina Chiu, CFO at ESRT, emphasised during the conference call the high liquidity, well-staggered debt maturity schedule, and the absence of unaddressed debt maturities until January 2028.
