Investors buy into Empire State Building

Shares of Empire State Realty Trust Inc., owner of the Empire State Building, rose in their first day of trading Wednesday as investors bet the marquee property will be able to attract more tenants as New York's technology sector grows.

The shares, which were initially sold late Tuesday at $13 apiece, rose as high as $13.49 before easing back to close at $13.10, up 0.77 percent, on the New York Stock Exchange. The broader market fell.

With the company's nearly $930-million offering, investors are valuing the company at about $3.2 billion.

Empire State Realty Trust owns the skyscraper it is named for and 18 other properties in New York and Connecticut. The portfolio's office space is 17 percent vacant, but some investors believe its vacancy rate could drift lower, boosting the real estate investment trust's leasing income, said Michael Knott, analyst at real estate research and trading firm Green Street Advisors.

"It's definitely a bet on an improving Manhattan office market," Knott said.

A key source of demand for New York office space is the technology sector, analysts said. Office rents in the New York metro area rose an average of 0.8 percent in the third quarter from the prior quarter, the second biggest increase after San Francisco, said real estate research firm Reis. Both cities benefited from growing demand for office space from the technology sector.

The Empire State Building is arguably the most famous building in the world. It opened in 1931 during the Great Depression and, at 102 stories, stood as the world's tallest building until it lost its title in 1972 to the World Trade Center's north tower. King Kong famously climbed the Empire State Building in a 1933 movie.

The net proceeds of the offering are expected to be about $754.4 million, according to the company. Much of the proceeds from the offering will go to the estate of Leona M. Helmsley and other nonprofit owners.