SL Green Defies Office Market Headwinds with Strong Leasing, Sees AI as a Driver, Not a Threat

This analysis is based on the Q4 2025 earnings call of SL Green Realty Corp. (NYSE: SLG).

NEW YORK – SL Green Realty Corp., Manhattan's largest office landlord, struck an optimistic tone in its latest earnings call, detailing a quarter defined by stronger-than-expected leasing velocity and a clear strategy to navigate a complex macroeconomic environment. The company's performance suggests a nuanced narrative for the New York office sector, where specific demand drivers like artificial intelligence (AI) and international capital are creating pockets of significant strength.

Contrary to fears that AI might reduce corporate space requirements, SL Green executives reported the opposite trend. "We are not seeing tenants downsizing due to AI," a company representative stated. "In fact, many of our recent deals involve expansion. The efficiency and profitability gains from AI appear to be enabling growth for these firms." The demand is quantifiable: the company noted that technology tenants, including those focused on AI, are actively seeking over 8 million square feet of space in their portfolio, with 1.2 million square feet tagged specifically for AI infrastructure and operations.

The investment landscape also presented a bright spot. Despite geopolitical strains, Asian investors continue to view premier New York City real estate as a premier, stable asset class. "There is a strong, persistent desire to deploy capital into NYC," the management team explained, characterizing the appeal as akin to "the real estate equivalent of U.S. Treasuries." This capital is looking for entry through various structures, including debt, equity, and development partnerships.

Financially, the company is poised to recognize approximately $78 million in rental revenue from commenced leases, contributing to a projected same-store Net Operating Income (NOI) growth of 3.5% to 4.5% for the year. On capital allocation, the board affirmed a long-term view on dividends, tying policy to forward earnings growth and free cash flow rather than short-term quarterly fluctuations, with 2027 highlighted as a particularly strong upcoming year.

To streamline its portfolio and bolster its balance sheet, SL Green is advancing a planned $2.5 billion asset sale program. The diverse slate of properties on the block includes non-core office buildings, development sites, and residential and retail assets, with several transactions reportedly in advanced stages for the latter half of the year.

Market Voices:

"The AI-driven demand is a powerful counter-narrative to the doom-and-gloom about office real estate. SL Green's data shows innovation sectors still value and need physical hubs, which is a crucial signal for the entire market." – David Chen, Real Estate Analyst at Horizon Advisors.

"This all sounds cautiously positive, but let's not ignore the elephant in the room: a potential city budget deficit could lead to higher taxes and services cuts, making NYC less attractive. Their asset sales are a necessary lifeline, not a sign of unchecked strength." – Marcus Thorne, Managing Principal at Urban Capital Insights.

"The sustained interest from Asian investors is the bedrock here. It provides a floor for valuation and enables strategic moves like these sales. It confirms NYC's irreplaceable status in the global capital hierarchy." – Priya Sharma, Director of Global Real Estate at Stirling Partners.

For the complete details and financial statements, investors are directed to the full earnings release and transcript available on the SL Green investor relations website.