Michael Griffin: Great. Maybe just going to Tom on the leasing. I’m curious if you’ve noticed any time for space takers that they’re delaying decision-making in terms of taking space. And then if you can provide some more color on concession packages, appreciate what you provided kind of in the prepared remarks, but your kind of expectations for that on a go-forward basis would be helpful.
Tom Durels: Sure. I believe your first question was the timing of tenants in terms of deciding on their leasing. And it really is tenant by tenant. It will range from very quick decisions and particularly for those that want built space that were our prebuilt suites and even full floor prebuilts will attract those tenants. We’re working on a deal right now. We’re actually a tenant is has a pretty quick time line of whether they want to get into the space. And then it’s others that can enter the market as much as 18 months or more before their lease, current lease expires and they’ll be shopping the market for an extended period of time. So I can’t say there’s a trend as much as it just really runs a wide gamut depending upon the particular tenants’ needs and what’s going on with their business as well as the space type that they’re pursuing.
And your next question was on leasing costs. Well, I made the comments earlier in my prepared remarks about what drove our leasing costs this quarter, we’re really not seeing a significant change in the market. Generally, most of the leasing we do involves a fully prebuilt space that’s been built on spec, for which we already have a significant amount of built inventory, and we’ve already incurred that cost, to turnkey installations. And that’s generally what we continue to see in the marketplace, and that was what we experienced on both the LinkedIn and the Starbucks transactions, which has been consistent with the market over the last — and consistent with the leasing we’ve done over the last several years.
Michael Griffin: Great. And then just on the retail acquisition, Williamsburg, should we read into this as these kind of acquisitions appear more attractive relative to other asset types? And is there anything you can kind of quantify in terms of cap rate or kind of IRR basis, that would be helpful.
Anthony Malkin: Griffin, we were very happy to be able to complete 100% recycling of the sales proceeds from prior sales. And it’s really a matter of just, as I’ve said before, we’re omnivorous opportunivores. We go for where we think there is the best combination of value and growth potential when we do either acquire or recycle capital. And I think what you should read into it is that given the nature of a 1031 exchange, which operates in a compressed time frame, you have to operate on the best execute on the best opportunities presented to at that time. At the right price, the right basis, we’ll definitely do office. We know how to build out, renovate, modernize, amenitize with energy efficiency and indoor environmental quality assets in the right locations with the right size floor plate to perform.
We’ve demonstrated that. The fact is that we have to operate in the compressed time frame, and that’s what presented its best opportunity when we had to make that acquisition.
Operator: Our next questions come from the line of John Kim with BMO Capital Markets.
John Kim: I had a follow-up on the LinkedIn decision to move from the tower floors to the base floors. Can you comment on the new rent that they leased versus what they’ve vacated? And also what the mark-to-market is of the vacated space?
Tom Durels: Yes, John, I don’t want to get into the specific details of the lease transaction. But I would just generally say we’ve been signing leases in the 70s per square foot. And last quarter, we signed leasing the tower floor in the 80s. And so the deals that we signed this quarter were fairly consistent with what we’ve been seeing over the last couple of quarters. Does that answer your question?
John Kim: We move to the base floor, is that because of the floor plate size or…
Tom Durels: Yes. Well, it’s contiguous with other space that they occupy. So they’re moving out of 3 tower floors, which are highly desirable and marketable. They will move to base floors and expand by 25,000 square feet, puts them contiguous to other space that they have as well as close to some built-out amenity space with foot hall on the third floor. It was part of a prior agreement that we had in connection with the earlier lease that was signed. And as a reminder, we did not spend or provide the TI allowance on those 3 tower floors that they’re vacating and we’ll be contributing that allowance money to the base floors that they will build out. But they have — they are in occupancy currently of those tower floors. We have an opportunity to market those in advance of them moving out in 2026.
So all in all, it’s a really favorable deal works very well for LinkedIn and it works very well for us as well. And it’s the type of thing that we do to accommodate tenants that have expanded and grown within our portfolio.
John Kim: At the Empire State Building with Starbucks moving in, was that a consolidation of existing space within New York or an expansion in the…
Tom Durels: It is a — yes, it is a relocation of their New York City offices of their only New York City offices from the Penn District to Empire State Building.
John Kim: Okay. And then Christina, you mentioned R&M expenses dragging down fourth quarter earnings. Any further color you could provide on that? And also on the Observatory, it looks like you’re guiding to a 12% reduction quarter-on-quarter in the Observatory versus a 3% quarter reduction last year. Is there anything you’re seeing as far as leads or website traffic that would lead you to think that there’d be a bigger seasonality impact this year?
Christina Chiu: For the Observatory, a lot of that is seasonality. So that we’ll continue to provide more information as that goes along. And for the major R&M, nothing in particular to call out. We have regularly planned projects, and it happens to just the timing if it comes into 4Q or if it leads into 2024. So not much notable on either items. These are both routine.
John Kim: The seasonality impact last year was pretty minimal, though, 3%.
