- Blackstone is negotiating to purchase 1345 Avenue of the Americas, a 50-story tower in Midtown Manhattan, marking a potential resurgence in New York’s office market.
- The building spans 1.9 MSF and has seen high leasing activity, including a large deal with law firm Paul, Weiss, despite a recent valuation decline.
- The deal could signal Blackstone’s renewed interest in office assets, as the firm seeks to capitalize on rising demand for top-tier office space in the city’s most desirable districts.
Blackstone Inc. (BX) is set to return to New York City’s office market with an agreement to buy a major Midtown skyscraper, per Yahoo Finance.
This acquisition signals a reversal of the firm’s previous strategy of reducing its US office holdings as it anticipates recovering demand for prime office spaces.
Deal Details
The property in question, 1345 Avenue of the Americas, is a 50-story building with 1.9 MSF of office space. Blackstone reportedly bet that the worst of NYC’s office market troubles are behind it.
Leasing activity has shown promising signs, with the building securing new tenants, including a landmark 765 KSF deal with the prestigious law firm Paul, Weiss, Rifkind, Wharton & Garrison in 2023.
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Strategic Shift
Over the years, Blackstone has drastically reduced its US office holdings, which now account for less than 2% of its real estate portfolio.
However, with strategic purchases like the 1345 Avenue of the Americas deal, Blackstone appears to be reversing course, making a calculated bet that New York’s premium office market is poised for recovery.
Though the deal is not yet finalized, and the purchase price remains undisclosed, S&P Global’s recent valuation reports show a significant drop in the building’s worth—from $1.25B at the time of the loan issuance to an appraised $896M.
Market on The Mend
The Big Apple office market has faced sizeable challenges since the pandemic began, with office vacancy rates hitting a high of 16.5% by the end of 2024.
However, a recent uptick in leasing volumes and a return to strong demand for premium spaces, especially in areas like Midtown, suggests the market may be stabilizing.
The Plaza district, in particular, has seen dramatic rent discrepancies, with top-tier buildings commanding rents up to 4x higher than less popular spaces, which has drawn investors back.
