Blackstone Selling NYC Office Tower to Empire Capital for $325M

A joint venture of Blackstone Group and RXR is in contract to sell 1330 Avenue of the Americas to Empire Capital Holdings for $325M, with the deal expected to close by the end of the year. Eastdil Secured brokered the deal.

The reported sale price represents a steep decline in value for the 40-story Rockefeller Center tower, which in 2006 traded for nearly $500M.

Blackstone became the majority owner of the tower on W. 53rd and Sixth Avenue in NYC, formerly known as the Financial Times Building, when it bought a stake in a six-building RXR portfolio in 2015. The deal includes a $285M debt on a loan from DekaBank that was acquired in a 2018 refinancing. 

Financial Times took its initials off the top of the building in 2020, when top-floor tenant Silvercrest Asset Management replaced the logo with its own. Other tenants in the tower include the Robert Wood Johnson foundation.

Harry Macklowe purchased the 1330 Avenue of the Americas tower in 2006 for $498M but had to auction it off to Canada’s Otero Capital in 2009 shortly after the global financial collapse. RXR bought the Rock Center tower for $400M in 2010.

Empire Capital has been on a bit of a buying spree for NYC office buildings. Last month, the company contracted to buy a 220K SF office building at 345 Seventh Avenue—a block away from the Penn Station redevelopment—for $107M.

According to a new report from Transwestern, the Manhattan office market posted 6.4M SF of leasing activity in Q2 2022, with nearly 20 transactions exceeding 50K SF and many leases fetching terms of 10 or more years.

Average asking rents for Manhattan offices increased to $72 per SF during Q2, snapping a streak of eight consecutive quarters in decline, Transwestern reported. Asking rents are up 1,9% YoY, though still 11.6% below Q1 2020.

Net absorption for Class A office buildings in Manhattan was positive during the second quarter, but overall absorption was negative 86K SF due to growing availability for older, class B buildings—reflecting a “flight to quality” by office tenants as occupancy levels still hover around 44%.

The 86K SF of negative absorption was a big improvement over Q1 2022, when the Manhattan market saw negative 2.1M SF of absorption.

Leasing activity in the Manhattan office market during H1 2022 totaled 13.4M SF, a 30% increase over the total recorded in H1 2021.

“The [Manhattan office} market is likely to see further stabilization and incremental growth, rather than a sudden upturn that matches the downturn at the beginning of the pandemic,” said Corrie Slewett, research manager at Transwestern.