Vornado Realty Trust (VNO) Earnings Call Transcript & Summary

All right. Good morning, everyone. Thank you for joining us for this office REIT discussion. My name is Jamie Feldman. I'm the senior office REIT analyst here at Bank of America. We are very glad you could join us for our global real estate conference this week. A lot of great meetings over the next several days. We are delighted to have with us today the management team from Vornado Realty Trust. Joining us in the center is Michael Franco, President and Chief Financial Officer; to his right, Glen Weiss, Executive Vice President, Office Leasing and Cohead of Real Estate; and to his left, Tom Sanelli, Executive Vice President of Finance and Chief Administrative Officer. So first of all, we want to thank all 3 of you for joining us this morning. We know you're busy, a lot going on out there. Maybe just to kick things off, if you don't mind, give a brief overview of Vornado and any update you'd like to pass along at the conference.

Sure. Good morning, Jamie. Nice to see you virtually and hopefully in-person soon. My guess is most of you, our participants, are quite familiar with Vornado so I'm not going to spend too much time on intro. We are a significant landlord in New York City. We also own franchise assets in San Francisco, 555 California and theMART, Chicago, all total 25-plus million square feet; as well as the premier street retail portfolio here in Manhattan. I think the central part of our growth story in the near term as well as long term is going to be powered by the Penn District, which we could spend time talking about this morning, where we own roughly 10 million square feet of office buildings and ancillary retail. We're investing significant capital to redevelop that area, which is in the center of the city, which is primed for significant growth in rents. And I think it's already reflected. And who we've attracted in terms of tenancies was basic-looking animal recently. And in that district, we continue to see incumbents, which Glen will talk about in terms of tenancy what we plan to do there, excited by it. And so given everything that's underway as well as what can be developed, we think that's going to drive significant growth in the economy in the foreseeable future. So with that, let me just kick it over to you. Let's get to Q&A. And I'm sure we'll touch on a lot of these things as we go.

Sounds good. So maybe just big picture, a lot going on in the New York City market. If you could just kind of give us the latest state of affairs. We're back from Labor Day. I know our firm pushed to get people back to the office. It's been maybe a little slower than people had thought. Where would you -- how would you characterize the state of the New York City office market today and what -- how your tenants are thinking about the return to office?

Sure, Jamie. So I think it's a mixed bag as we sit here right after Labor Day. Our buildings are about 20%, 25% utilization. We're having many tenant discussions, as you can imagine. I think real return will start ramping up at this point right around the New Year and then keep fast forwarding from there. There are more and more employees coming in. The streets are definitely more vibrant. I've noticed on my personal commute each morning a lot more vehicles coming into the city. So the action is definitely getting better but we're not there yet. With that being said, I will tell you the leasing market is extremely active. And that's all different types of tenants from all different types of industry sectors, really across our entire portfolio. So we're seeing many tenants coming out of the woodwork, kind of waking up and focusing now on their space needs in New York. And some of those is expansion deals, some of those is renewal, and some of those are people who want now to move to a new space. So we're right now very pleased with the activity across the portfolio. We have deal-making going on in different stages where the lease is out, proposal's in and answering RFPs. And that's across the board both at our Penn District projects and in our core Midtown portfolio.

Maybe just to tag on. In general, we are quite optimistic on New York City. And if you look at all the industries that are -- either they're housed in New York or they have major presence here, whether that's financial services, private equity, tech, fintech, health care, media, all these industries are booming, right? They're all posting record numbers, growing at very high rates. And so on a spot basis, yes, people are still returning to work and whatnot, right? If you look at the underlying businesses, these companies are in significant growth mode. And as they try to meet their aspirations, they need to hire a significant number of people, which is happening. Frankly, I've never seen a competition for talent like I've seen in my career right now in all those industries. And so you're seeing it show first to be part of a market where the activity level is basically back to pre-COVID levels. And now it's translating into a significant pickup in leasing discussions as Glen referenced, right? So the discussions we have today, the leases in terms of when they get signed, I don't know if it will be fourth quarter, first quarter. These things are large deals that may take time generally from a marketplace, but the bottom line is it's in process. And I think all that is a reflection of a strong overall economic backdrop. But I think as importantly, from a New York City backdrop, all these industries, which are the industries driving the economy, are growing here. And those companies are seeking talent, seeking to either expand or to redo their offices where it's going to be hospitable to employees and both being a recruiting tool as well as a retention tool as to why the new employee is going be in those companies. So I'm actually quite optimistic on that front.

So you've mentioned some companies are looking for new space, some are renewing. How would you characterize the change in space usage that you've seen so far and how tenants are going to be using their space differently? And what does that mean for total square foot required?

I mean on balance, I'd tell you we've seen very little change thus far. So we're constantly reviewing construction plans of our incoming tenants. I would say, on balance, more collaboration space, communal space than we had seen previous to the pandemic. But in terms of the spatial programming, not a lot has changed much. So I think it seems business as usual on the space plan, footprint standpoint as it stands today. I think companies are definitely focused on the higher quality product. You've heard us say it. It certainly had not [ wavered ] both as it relates to the quality of the product and the landlord that you're choosing, in addition to geography. So you're definitely seeing a bifurcation of the markets where many of the commodity buildings are not performing because they don't have any infrastructure, they don't have the amenities and they're in the wrong footprint geographically. But from a spatial design program standpoint, we're seeing very little change so far.

And do you think that's because they just don't know yet? They're not really back 100%, and I mean you had mentioned after the 1st of the year seems to be the new target date. Is that part of the issue that they just don't know?

I think -- I'm not sure it's that. I mean look, we've signed a bunch of leases during the pandemic, as Michael mentioned, not only Facebook and Apple. And I will tell you those spaces are just like they would have been pre pandemic. I think in terms of the unknown factor that you mentioned, look, I think, as we've been saying on our quarterly calls, this will take time. It is ongoing. And as people start coming back more and more, you'll see more of that confidence come back into the workforce. You'll see an unwinding of this work-from-home narrative, and we'll get back into [ Moynihan ] as we go month to month.

Okay. And I had a question come in from the field. This person is curious, with the pickup in leasing activity, if the lease terms are shorter or the same as pre COVID. And I guess just to add to that, if you could just talk about terms in general. What are you seeing in terms of what tenants want and what you -- how you might be -- you might have to change terms on leases?

I mean, I think 2 things. Number one, lease terms are generally still 10 to 15 years. I will say tenants are looking for more flexibility down the road in their lease terms by way of maybe contraction in rates. But generally, the lease terms have been the same. We have 10, 15 years on the bigger deals; on the smaller prebuilt, turnkey deals, between 5 and 10, which is also a standard from pre-pandemic times.

Well, we keep hearing about like break clauses or early termination rights. Anything like that creeping its way in? And I guess along the same lines, with the flexible lease providers seeming to be making somewhat of a comeback, at least that's what the articles are saying in terms of demand picking up for them, how is that creeping into the competitive landscape as you have to -- as you cut leases?

I would say the break clauses are much more for the small-sized tenants who are typically 5,000 or 10,000, maybe 15,000 feet. I think that's where you're seeing the break clauses, not a lot of big deals though. So we are seeing it. We are just more flexible as it relates to that to get some spaces filled that we prebuilt, but not on the larger deals overall.

Okay. And then I know on your conference calls and even as we talk to brokers across the country, there is a lot of talk still about tech being the key driver if there is net absorption. What can we expect to see from tech in New York City? I know that Facebook has been in the press about taking the rest of 770 Broadway. But just generally -- I guess not so generally, what can you say about that space specifically and Verizon's plans there? And then also just should we expect to see a wave of tech leasing in New York? And I guess you can talk about San Francisco as well.

Sure. As it relates to New York, I'm not going to talk about any of our tenants firsthand, but we do have the big 4: Google, Amazon, Apple and Facebook. And I will tell you the word of the day is growth, and they're going to grow. To Michael's initial point about talent, recruiting, it's all happening in New York big time. So I would look for growth going forward for sure. As it relates to San Francisco, I would think San Francisco is behind New York in terms of the story, in terms of the unwinding narrative that I talked about earlier. So we'll see where San Francisco goes. I mean for our campus at 555, we're full. So we're insulated from the general macro picture in San Francisco. But as we speak to the market out there, at least, once a week, it's certainly slower in terms of the growth factor and people demanding -- demand for space and expansion.

Jamie, I would say even a little more on that. I think New York City has become the most important tech market right now. I think it's the market that the tenants are growing most significantly. And they have -- this is -- Glen talks to not only our existing tenants but prospective tenants all the time, right? So he gets real-time feedback. They're talking to their employees given the environment they're in. The interest from their employee base of where their workers want to be, New York comes out resoundingly as #1 often, maybe #2 in some cases for the big 5, 6, 7 tech tenants and then many -- maybe the small ones, so -- smaller ones. I'm talking $50 billion, so not that small. So you have this huge demand to be in New York, notwithstanding everything that's happened. And I know you have spent a little time in the city. If you go on the streets at night or whatnot, I mean you've never seen the restaurants like they are today. I mean it is teeming with activity. New York is still New York, right? People question, is New York going to come back? New York's perfectly fine. It's going to come back just fine. All the things have made it great and continue to make it great. And the tech tenants in New York City has the deepest, most diverse stores of talent, right? And that is critically important. I mean the aspirations these companies have -- I mean they wake up every day, they think about how are we going to scale our business, how are we going to get into new businesses and whatnot. And they need people to do that. They need engineering talent to do that. And New York has become the #1 spot to recruit that talent, and we see that in our own portfolio with the recent deals we've done and the feedback we're getting. And so I think you're going to continue to see significant growth not just by them but by the other -- the next level down because there's a network effect at the beginning of the year. So I think the tech companies really never paused throughout this and they just continued to drive the market. And by the way, every other type of tech is competing, right? I mean you're a bank. If you guys are all over fintech, your business is going to get threatened, right? So I'm sure you, like every other major bank, is spending significant capital hiring significant people, you're doing it in New York City. You got other fintech providers that are not banks that are coming from other angles. So that's what's driving the activity right now, and I don't see it slowing down.

So how -- I mean just for the person who's not on the inside like you guys are, I mean, Facebook obviously just took a space with you. It just seems like the big tech companies have all signed big leases lately and have all laid out their plans, and a lot of them are also delaying the return to office and kind of rethinking hybrid. How do we just make sense of that -- those 2 conflicting fact patterns?

I think it's quite clear that they expect a full return to the office, particularly in New York. And they fully expect to grow their employee bases in New York. I think it's crystal clear.

Watch what they do, not what they say. Okay? They'll come back in October -- they're coming back, right? And they want more space, right? So I mean we're real estate guys. We're thinking about, "Well, they just took 400,000 feet. How can they take more?" Look at the marketing cash of these incumbents. Look at the access to capital they have. Look at the idea generation they have. Okay? They don't think about 100,000 -- these guys are doing kind of -- probably they create another $1 trillion of market cap. You're not going to do that by staying at status quo and just grinding it out of what you have, right? You got to grow your business, right? You have to create new businesses. And so ultimately, that drives the need for additional space in quantum metrics, from 400 going to 450. That's why you saw Facebook scale out from 700,000 feet to 1 million to 3.5 million feet. Google's now, what, 8-plus million feet in the city. These companies are growing by leaps and bounds. And that's -- I'm just talking about the big 4, right? There are many other companies beyond that. So I think we have to get out of our mind, "Well, they just took some space, they're not going to need one." These companies every day are waking up, "How do we grow our businesses by significant amounts, right?" Look at the size of these companies, and I think that gives you a sense as to what's possible.

Okay. So how does that line up with the space you have available? I mean I know the Hotel Penn you're treating as a development site. You've got Two Penn. How does the pipeline look for those assets? And anything else across the portfolio maybe people aren't thinking about that could end up being a home for some of these tenants or other growing tenants?

Why don't you talk generally about the reception in Penn?

Yes. I think we're perfectly situated at Penn for what's happening overall in the market, not just tech. So number one, we're in the center of the city directly at transportation, right? So you can get everywhere from our buildings or you can do that from everywhere else in the city. Number two, what we've done at Farley, what we're doing at PENN 1 right now and what we're going to do with PENN 2 where we've recently started with construction physically, very unique spaces, flexible formats, high-standard infrastructure. We're doing everything that we think is right for the future of the workplace. And that -- as it relates to amenities, as it relates to the infrastructure, the lobbies, the outdoor space, all of that campus theme that we've talked about, it's coming to fruition. Tenants of all types, financial, media, entertainment, production, tech, fintech, they're all coming in. And the -- it's been a resounding reception for us in Penn to date. So it's not just the big tech, but certainly -- and it certainly helped us a lot, signing those 2 leases that we did during the pandemic with Facebook and Apple. Those were the drivers. And that changes the demographic population in the district immediately. And when those tenants move in, it's going to change everything even more so real time. And in addition, we've already started reletting our retail. We have a few great restaurant deals signed up, which you'll hear about soon. So it's all happened -- the reception has been nothing short of astounding for us. And we're down there in our experience center at least once a day showing the projects to potential tenants, including PENN15 open site.

And maybe to transition the conversation to just rents. I mean how has your underwriting changed for those assets or your projected yields? I know you've got the land reset -- the ground lease reset. But maybe if you could talk about what has happened in market rents and how that impacts what you think your returns could be at those projects or anything else you're penciling in terms of development or redevelopment.

Well, I'll let Glen talk generally about the market, but what I would say about Penn, Jamie, is that if anything, given everything Glen just said, our expectations in terms of the yields -- I mean we publish yields. We're confident in those yields we published. If anything, our expectations, our aspirations are higher, right? And I think the interest level that we've received gives us confidence that we can achieve that. As we talked about in the last call, we raised rents in our best buildings, and that excludes everything going on with Penn District. So I think that gives you a sense as to what we see specifically for the development yields we've published already. But we feel very good about those. And again, our whole expectation is we're going to exceed those, but we're still early days. Why don't you just talk just generally what you're seeing market-wide?

Yes. Across the market, Jamie, generally, rents have held very well. They certainly have stabilized. As Michael said, we may increase rents in certain buildings. But across the market, if you talk to the brokerage houses, read their reports, rents have certainly stabilized. And in some submarkets, they've creeped up a bit the last quarter or 2. The one thing we have our eye on is obviously concessions, which did spike during this pandemic between TIs and free rent. I think those have stabilized. I think we've hit the top on those. I do see house sellers and landlords being more tough on both TI and free rent, but that will, to be fair, take some time to come back down to levels that we're more accustomed to as we get through this.

So where would you say net effective rents did settle out kind of off the peak and how much -- in terms of free rent and TIs? That seemed to be the key driver.

I would say somewhere between 10% and 15%. In that range, you saw the fall-off in NERs.

Okay. And how much of that do you think is free rent versus concession versus TIs?

I think most -- I think it's probably 50-50. Maybe a little bit more TI than free rents, 60-40, something like that. But it's really so situational, deal specific. A lot of it has to do with what the tenant needs. Do they need capital to build or would they rather more of a free rent package depending on their current lease expiration? So it's really lease-by-lease specific, but maybe a little more heavy towards TI and free rent is what I've got without knowing the stats.

So what would you say average TIs are right now? I know you said it's situational, but what are people coming to the table expecting?

I'd say on a 10- to 15-year term, call it, in the [ $1.30, $1.35 ] range, something like that.

Okay. And then I guess shifting gears here to the retail platform. Maybe if you could talk about -- in Steve's Chairman's Letter, he talked about maybe some unique uses for some of the larger vacancies you have. Can you just talk about the leasing and demand pipeline today and just your latest thoughts on getting some of those larger spaces backfilled?

Sure. Look, I think similar to what you're seeing in the office sector, you're almost seeing a flight to quality in the retail sector, right, where tenants are looking to upgrade their locations, right? If they were B+ or A- location and they can move to a prime spot, you're seeing some of that. You're seeing new entrants come to the marketplace that formerly being in the city is too expensive. So I would say activity and discussions, again, certainly up, much like office. A number of large-format players looking in the city, just given the opportunity here. You saw that for example with Wegmans at 770 Broadway, where we signed an, I think, attractive lease for them to take over the Kmart space. So in general, you're seeing retailers kick the tires much more than they were. Again, I would say submarket by submarket, it varies. And I think some retailers, as it relates to Fifth Avenue or Times Square, they want to have the confidence that tourism is absolutely picking back up. It's been fits and starts. I think with the recent announcement late last night that we're not going to allow foreign tourists that are unvaccinated, I think that's positive, right? Obviously, domestic tourism numbers have gone up quite significantly in the last few months for New York. So you need to see, I think, a sustained pickup is exactly happening before some of the larger commitments as it relates to Fifth and Times Square and so on. But I would say, in general, it's picked up. Interest level in Penn has been very active. Glen referenced some restaurant deals we're finalizing, but I would say it extends beyond that. Now that Farley's open, now that dining activity is picking up in terms of traffic there through Moynihan, the interest of retailers has picked up. We have varying discussions there. I would say the same on some of the other smaller spaces. So I think Fifth and Times Square are going to take a little bit longer just until tourism picks up. In terms of some of the larger vacancies that we have, we continue discussions and pursue on some of those. Whether it's traditional retail uses or some of the other uses we referenced, our job is to find the highest and best use and get discussions going with a number of those players. I would say this concept of experiential retail is very much a thing that's active. We've got discussions going with 2 or 3 tenants when you think about something like the Van Gogh experience, which is both here and other cities. And you've got several like type tenants that are looking to take prime space, whether it's Times Square or one of those. They want to be where there's a lot of foot traffic and they can attract significant business to that. So a number of different types. The market is clearly, while the discussions have picked up and more retailers are kicking the tires, still on the same pace, in terms of where discussions are at or activity level, as office. But I think the same things, flight to quality. With the market picking back up, I think you'll see leasing pick up, and it will start with smaller spaces and then migrate towards the larger spaces once tourism picks up.

And how would you say net effective rents have moved for this property type?

I think it's tougher to characterize that sort of from pre to post pandemic. Obviously, rents were already correcting pre pandemic, right? So submarket by submarket, rents were down 20% to 15%, right, depending on the submarket. Madison is probably the most extreme of those examples. So they've gone down more -- I don't know if they've really gone down more, Jamie. I think it's a matter -- it's sort of an on/off switch, right? There's interest or there's not interest. And if you look at some of the deals we've signed, I think the rents are pretty consistent with where we thought they were as the pandemic hit. So I think if you have the right space, you can achieve the right rents. So -- and I don't know that rents have really moved a lot more over the course of the pandemic. It's really there's been a market demand or falling off of demand, and you really need that to pick up. But I think the rents, sort of they already really corrected by a large margin.

Okay. And I know you've been pretty active selling down some of the retail. Do you think we should expect to see more?

The thesis there was -- we took a look at our portfolio. And in general, we've only went on franchise assets, assets that are going to be in high demand by the tenants. And we own unique real estate. As we looked at the assets that we sold, we didn't think any of those were really franchise assets. Madison, in our view, has changed materially. There's been a demographic shift, and tourism shifted away from Madison. We don't see rents recovering there to former levels anytime soon. And when we looked at the capital required and the rents that we'd achieve and therefore, the yields, we got pricing for those assets that more than compensate us for holding those given our outlook there. So we'd rather redeploy elsewhere. And we have a handful of other small assets that we consider similarly non-franchise. Yes, you might see us monetize those over the near term. But none of those are huge. It could be $15 million, $20 million each. And these were some of the largest -- I'll call it larger smaller assets and again, I think reflective of the fact that there was capital to be required and they're generally all vacant and we just didn't see the return near term as that compelling.

Okay. So I've had a couple of other -- a couple of more questions come in. I want to -- need to make sure we get to those. What's the latest time line for the tracking stock? Is that something you're still planning to do?

We are, we are. We're hard at work in the documents and the other particulars. I would say not going to happen any sooner than January 1 in all likelihood. So I would say we're still aiming for around the beginning of the year, whether that's a little before or more likely a little after.

And I know -- when I talk to investors about it, there's definitely some confusion of whether this is a spin or this is a tracking stock. Or is this -- I think you've told me in the past it's basically a 30% stake in the Penn Plaza assets. Has your -- what's the latest in terms of the plan?

That's definitely not a spin, Jamie. It is a tracking stock. I can't give you the exact percentage. We haven't finalized that ourselves. I think it's fair to say it'll certainly be less than half. But it would give investors the opportunity to invest just in the Penn District, which is a different risk/reward profile than the balance of the business. It requires more patience, right, given, today, it doesn't produce a lot of excess cash flow. I think it would account -- require -- it's going to be using capital for quite a period of time, but the payout is dramatic. And so we know there are investors that have a high degree of interest in that, that are not investors in Vornado today that would be investors in the Penn District. And so Vornado shareholders can see an exposure to Penn. But there's a set of investors that just went on Penn without them owning the balance of Vornado and getting that development exposure there in the city. Then this would give them that opportunity. So -- and in terms of a tracker versus a spin, the benefit is same management team, same Board, less -- frankly, more cost efficiency, right? If you had to have 2 teams, 2 Boards, 2 public companies, et cetera, there'd be significantly additional costs as we've seen from both Urban Edge and JBG Smith when we launched those spins. So the tracker has the benefit of being more cost effective as well as providing investors the opportunity to invest directly in Penn. And so that's the notion. And the exact percentage is still to be determined, although as I said, less than half would be distributed.

Okay. And then someone had asked about Google's option exercise at St. John's terminal at about $1,600 a foot. So how do you think about this in terms of New York valuations, your own portfolio valuation? And then just generally, what are you thinking in terms of putting fresh capital to work in the market?

Look, that was a deal that Google copped when they leased the entire building, and so I think they probably made a good buy. They get a brand-new building at $1,600 plus a foot. And I think if they leased it without having the option to buy, and today, given where interest rates are, whatnot, I think they would have paid more than that. So they're probably in the money on that buy, which is quite the exercise, in addition to controlling their long-term future. So look, I think that capital is -- after being on pause in New York for certainly a year and focusing initially on, say, long-term leased assets, suddenly -- I think now capital is opening up. I think you're seeing more capital focused on value-added assets, multi-tenant assets that have more of a traditional role in addition to those assets that are longer-term leased. And I think you'll see -- I think you'll continue to see that pick up. So -- and I think New York is, I think, viewed and I think probably office in general -- viewed as more of a value play [ versus ] other sectors where cap rates are historic lows, obviously, office is not, although as -- like St. John's or take [ AUR ] assets that are heavily leased to a single tenant, return and I would say cap rates at record lows for those assets as well. But in general, I think office for multi-tenant asset, the cap rates are probably up a touch from where they were pre COVID, notwithstanding the financing rates are down well over 100 basis points. So the cash-on-cash yields are better, the cap rate spread versus other sectors is better. And so I think capital is starting to migrate back to office as they recognize that the markets, I think, have bottomed from a leasing perspective, given all that Glen mentioned. So that's the general state. I think you'll see transaction activity pick up. And it starts with the smaller assets. But even things like the CVS headquarters, I think it was pretty good execution for a building that's going to have significant vacancy near term.

Okay. And then speaking of vacancy, for my last question, looking ahead to '22, what are your largest rollout -- what's your largest rollout risk?

We have very modest roll in the rest of '21, '22, I mean even '23 for that matter, which we're attacking everything, as you can imagine, right now. On '22, we have about 700,000 feet rolling, of which about 100,000 of that is in the Penn District, the PENN 1, PENN 2. So we feel really good about it. Nothing very large at all in terms of big tenants. So there's going to be a lot of blocking and tackling, which we're obviously going after right now. We're feeling good about the renewal program. As we project the next 3 years, who's going to stay, who's going to leave, certainly more than 50%, we think, is going to stay. Walmart, we're in very good dialogue. We just finalized one very large renewal which you'll hear about soon. So we feel good about the portfolio with a modest roll, and we're working with leasing space. And as I said, the pipeline is robust. So as we sit here, fall of '21, we think things are going to continue to improve. And certainly, for our portfolio, when it's quality, tenants are seeking us out, which we're very pleased with that right now.

So do you think your occupancy has bottomed for this cycle?

I think so, I do. Taking into account what we have in the hopper, I do. We're feeling good going forward as we get out from the bottom of this whole thing, yes.

Okay. All right. So just -- we're going to wrap up here with some quick rapid-fire questions. I've got 3 questions for you. First one, which of the following is the greatest challenge facing U.S. public REITs today: first -- A, Fed action and higher rates; B, supply chain issues, which include labor and logistics; or C, flows to non-traded REITs?

I don't know. Maybe D, none of the above. I would say it's a variation of C. I don't know if it's exactly C, but I think it's capital flows but like private securities that don't get marked to market daily, right? They're doing the same plans, but there's less volatility in their minds. So that's -- I'll leave it at that.

Okay. Over the next 5 years, which markets will outperform: urban coastal or sunbelt?

Urban coastal.

Sure about that?

I am sure about it.

I don't think you could answer it any other way.

So I talked about the growth. Wait until they deal with the -- let's see whether the infrastructure is really set up to absorb the people there. But you can't grow like these companies want to grow in those markets, so I'll take New York.

And then finally, for your company's office plans post pandemic, will you: A, have no change from pre pandemic; B, leave it up to individual teams; C, offer hybrid; or D, go full remote?

The answer is we will have a policy and -- look, I think most common, you're going to have to have some level of flexibility, right? And I think it can work, right? Whether it's a day a week, there'll be some level of flexibility that I think is responsive to technology and at the same time, still being responsive to companies do operate most efficiently and most effectively in person. It's how you build a culture, how you train people, mentor people, develop people. And so we're no different, notwithstanding we're in the real estate industry. So we'll have some bit of flexibility that everybody will be in the office.

Okay. All right. Unfortunately, it looks like we've run out of time. I could clearly keep going here. But Michael, Glen, Tom, thank you so much for your time, getting us started here today. Good to see all of you, and good luck out there. And thanks for participating in the conference.

Thanks, Jamie.

Take care.