5 Best New York City REITs and Tips to Invest

New York City REITs (real estate investment trusts) offer investors exposure to the lucrative NYC real estate market without the need to directly own property. These REITs invest in a variety of assets, including office buildings, retail spaces, multifamily apartments, and commercial properties across Manhattan and other boroughs.

Given NYC’s high property values, strong demand, and global economic significance, investing in NYC-focused REITs can provide attractive returns, dividend income, and portfolio diversification. However, factors like interest rates, occupancy trends, and market cycles play a crucial role in their performance.

Understanding New York City REITs 

New York City REITs focus on buying properties within the city. This opportunity is attractive to many people because of the number of high-end businesses headquartered in NYC and luxury residences. NYC REITs are a great way for investors to gain exposure to the NYC real estate market.

Top 5 New York City REITs

Are you ready to add NYC real estate to your portfolio? Check out these five NYC REIT stocks.

1. American Strategic Investment Co. (NYSE: NYC)

This REIT is headquartered and buys stock in New York City. It’s trading around $10, meaning the minimum investment cost is very low. As of June 30, 2024, the REIT owned seven properties spanning 1.2 million rentable square feet. It has invested in high-end office, retail, and condominium properties. American Strategic Investment could offer low-stakes exposure to the NYC real estate market with the potential to grow. 

2. Vornado Realty Trust (NYSE: VNO) 

Vornado Realty Trust manages over 20.6 million square feet of Manhattan properties, primarily focused on office spaces and residential locations. Trading for $43, this REIT is accessible to most investors. This investment also provides NYC REIT dividends of $0.3, a dividend yield of about 5.52%. It may not seem like a lot, but it has the potential to grow back to pre-pandemic highs.

3. Empire State Realty Trust Inc. (NYSE: ESRT)

This New York-based REIT owns many office, retail, and residential properties throughout NYC. It’s named for the most famous building in its portfolio — the Empire State Building. Empire State Realty Trust has a focus on sustainability, striving for quality leadership and implementing energy-efficient solutions throughout its properties. This REIT trades for around $9.56 and is paying annual dividends of about $0.14. 

4. SL Green Realty Corp. (NYSE: SLG)

SL Green Realty Corp. calls itself New York City’s largest owner of real estate, and its REIT is focused on acquiring, managing, and maximizing the value of its New York properties. SLG is trading for around $68 and pays annual dividends of about $3.09 per share, a yield of around 4.60%. SL Green Realty is also focused on improving sustainability throughout New York City, by embracing energy-efficient solutions in its properties. 

5. AvalonBay Communities Inc. (NYSE: AVB)

AvalonBay Communities owns and manages a wide portfolio of apartment communities and homes. This REIT isn’t exclusive to properties in New York City, but a wide portion of its portfolio is invested in NYC, as well as New England, the Mid-Atlantic, and other regions across the country. AVB is selling for around $221, making it the highest-value REIT on this list. It also provides its investors with annual dividends of $6.75. 

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How to Invest in New York City REITs: 7 Steps

If you want to add an NYC REIT stock to your portfolio, you’ll want to follow these seven easy steps to start investing.

1. Determine Investment Objectives

Before choosing an investment, first clarify your goals for a New York City REIT investment. Are you looking to grow your wealth in the long term? Do you hope to get passive income from dividends? You’ll also want to think about your risk tolerance. Some REITs come with a higher level of risk than others, and you want to ensure you don’t take on more risk than is appropriate for your situation. These considerations will help you select an investment that aligns with your goals. 

2. Conduct Market Analysis

After clarifying your goals and risk tolerance, conduct a market analysis. Research the trends and demands of specific investment opportunities you’re interested in as well as the overall real estate market within NYC. Factors you should keep an eye on include vacancy rates, rental growth, and development plans to determine whether the real estate market is currently an attractive opportunity.

3. Identify New York City REITs

Next, you’ll want to find specific New York City REITs that could be a potential addition to your portfolio. Research their market performance, as well as the REIT’s portfolio, leadership team, dividends, and average yield. You can find NYC REIT stocks from the list above or by conducting your own research.

4. Review Dividend Yield

Dividends are one of the most attractive components of a REIT investment. If dividends are a high priority for you, you’ll want to review your potential investments' dividend yield and payout. NYC REIT dividends can seem insignificant, so you’ll want to assess the potential for them to provide substantial income over time as the stock grows and you increase your number of shares.

5. Assess Risk Factors

Before investing, you’ll need to consider the risks associated with that opportunity. For New York City REITs, investors should consider real estate market volatility, interest rate changes, regulatory changes, and the macroeconomic environment. Then, you should ensure that the level of risk fits within your portfolio and investment goals.

6. Consult with Financial Advisers

It’s always a good idea to consult with financial advisers before making changes to your portfolio. A registered adviser will be able to give you more insight into available investments, as well as how they’ll impact your financial goals. The adviser can provide objective opinions that you can use to create a well-balanced portfolio.

7. Understand Tax Implications

REIT dividends are taxed differently than those of traditional stocks. Dividends from REITs are generated as ordinary income, so they’d be included on top of any income you receive from work. It’s important to discuss with a financial adviser or tax professional how this income will affect your overall taxes.

Gain Exposure to New York Real Estate

New York City REITs can be a great way to diversify your portfolio in the NYC real estate market with a fairly liquid investment traded on the public market. It has the potential to grow your portfolio while providing dividends that can supplement your income. Consider these top five NYC REIT stocks and discuss with your adviser how they might benefit you.

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