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(Bloomberg) -- Blackstone Inc. is nearing an agreement to purchase a Midtown Manhattan tower, which would mark a return to New York office dealmaking for the world’s biggest real estate investor.
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The alternative asset manager is in talks to buy 1345 Avenue of the Americas, a 50-story skyscraper spanning 1.9 million square feet, according to people familiar with the matter. Blackstone is betting the worst is over for New York’s beleaguered office market, anticipating rents will surge for top tier space, the people said, asking not to be identified as the deal is not yet closed.
A representative for Blackstone declined to comment. Representatives for Fisher Brothers and JPMorgan Asset Management, which jointly own the building, did not immediately respond to requests for comment.
Deliberations are ongoing and there is no certainty a deal will be concluded, the people said.
It was not immediately possible to confirm the price Blackstone is paying for the building; however, ratings reports for the loans secured against the property suggest its valuation has plunged. S&P Global appraised its value at $896 million in a November 2024 report, down from $1.25 billion when the loan was issued.
That’s despite securing a string of new leases, including the largest deal signed in 2023, a 765,000 square foot lease to law firm Paul, Weiss, Rifkind, Wharton & Garrison which moved into space vacated by AllianceBernstein Holding LP after it moved its headquarters to Nashville, Tennessee.
New York’s office availability rate reached 16.5% at the end of 2024 according to a report published earlier this month by broker Colliers International Group Inc., roughly double its level before the pandemic hit. Still, that’s the lowest since September 2022 thanks to leasing volumes that reached the highest in five-years during 2024, Colliers data show.
The elevated vacancy rate also masks a wide variation in the performance of New York’s office market and even within small areas like Midtown’s Plaza district where the five most in-demand buildings commanded rents that were four times higher than the least-popular properties.
That’s lured investors like Blackstone back to the market after an extended period in which the private equity giant whittled away its US office exposure. Traditional US offices account for less than 2% of the firm’s real estate holdings that are now dominated by apartments, warehouses and data centers. That’s down from more than 50% before the 2008 financial crisis.