NEW YORK CITY—A big chunk of a Midtown East, Plaza district office tower has come on the market. The State Teachers Retirement System of Ohio has put a stake of as much as 49% in 590 Madison Ave. up for sale, according to Crain's New York Business. The non-controlling interest in the approximately one-million-square-foot tower could fetch $1.5 billion or more.
Such a price for the building—which was developed in the early 1980s as the global headquarters for IBM—could firmly establish that commercial office values have exceeded their previous peaks set during the last real estate boom in 2007, Crain's notes. Ohio STRS has hired Darcy Stacom and Bill Shanahan, brokers at CBRE, to market the property and handle the sale of the stake. CBRE did not respond to GlobeSt.com's request for comment by press time.
An Ohio STRS spokesman says the $74 billion pension fund would retain a majority interest in the black, granite-clad property, which is distinct for its large public plaza space, its triangular footprint and the way it cantilevers dramatically from its base towards the corner of East 57th Street and Madison avenue.
"It is a situation where we would be looking to gauge interest in selling a portion of the building, but we want to retain control," Nick Treneff says. Selling the stake will allow the pension fund to capitalize on the city's soaring real estate prices while still holding onto the majority of what has been a very profitable investment that produces strong cash flow and will likely continue to appreciate.
The developer Edward Minskoff manages and handles leasing at the property, which is nearly fully occupied and commands rents in the mid $100s per square foot for its upper floors, bringing in some of Midtown's highest rental rates. IBM, which once occupied nearly the entire tower but has since significantly downsized, is still the property's largest tenant with about 120,000 square feet, according to information from the real estate database CoStar. The building is home to several boutique financial firms.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
