NEW YORK CITY-SL Green Realty Corp., the city’s largest office REIT, is expanding its footprint in Manhattan’s tightest office market: Midtown South. The company has snatched up 304 Park Avenue South—a prime mixed-use building on the corner of 23^rd Street where the Flatiron District and Gramercy converge—from seller Walter & Samuels for $135 million, or $628 per square foot.

Under the deal, SL Green will acquire the property with approximately 50% cash and 50% in operating units, marking the fifth time this year the REIT has used operating units in making new acquisitions. It is expected to close officially on June 1.

Andrew Mathias, president of SL Green, describes the buy as a “careful” decision. While the Midtown South office market boasts one of the lowest and tightest vacancy rates in the nation (6%), Mathias says the “substantial” lease activity in the area have driven cap rates on marketed deals below the company’s investment thresholds. However, Mathias says the REIT's relationship with the seller and the building itself presented a “unique opportunity” to emerge into the growing submarket.