Blackstone nears major deal for NYC office tower in latest sign of post-COVID real estate comeback
Blackstone, the world’s largest alternative asset management firm, is all-in on Manhattan’s turnaround after the COVID pandemic crippled the commercial real estate market.
The firm’s effort to buy 1345 Sixth Ave. from Fisher Brothers was widely hailed this week as a stroke of faith in the Manhattan office market — but it wasn’t the first mega-deal by the financial giant.
Last summer, Stephen A. Schwarzman-led Blackstone also signed the largest Manhattan office lease of 2024 at Rudin’s 345 Park Ave., where it decided to renew and expand from 720,000 to over 1 million square feet.
Both moves reflect a change of heart by Blackstone, which said last year it was focusing less on office properties than on tech and industrial investments.
Blackstone’s pivot signals a remarkable — and to some analysts, unexpected — overall resurgence in the Manhattan office market, which many gave up for dead after the pandemic.
If the not-yet-certain 1345 Sixth purchase, first reported by Bloomberg, goes through, it would accelerate a turnaround in the investment-sale market, which saw $1.6 billion in total sales in the fourth quarter of 2024 — up 98% over the third quarter and 110% above the fourth quarter of 2023, according to Avison Young.
The sales were still well below 2019 totals, but the upward trend is clear, driven in part by reduced building values due to rising interest rates and overhanging debt.
“There are a lot of bargain hunters out there but they’d better move fast because the bargains won’t last,” said one investment-sale broker who didn’t want to be named.
Financial terms for the prospective 1345 Sixth deal were not disclosed.
Things are even more upbeat on the leasing front, where landlords and tenants have “put work-from-home in the rear-view mirror,” a JLL report said.
Tracking service VTS reported this week that office space demand in the Big Apple increased in November to more than in pre-pandemic 2019 for the first time. The survey, which analyzes companies’ space requirements, is regarded as an authoritative preview of the leasing market’s direction.
CBRE global brokerage head Stephen B. Siegel told The Post, “VTS is correct” about demand, which landlords and brokers also observe in increasing requests for “tire-kicking” tower tours by tenants on the hunt.
Regarding 1345 Sixth Avenue, where he isn’t involved, Siegel said, “It is a great asset with stabilized occupancy once Paul Weiss moves in.”
The law firm is moving into 765,000 square feet there in 2027 — the largest lease signed in 2023. The tower recently had $120 million in capital improvements.
The building is more than 92% leased to tenants such as Intercontinental Exchange, Canyon Partners and Fortress Investment Group.
As reported in The Post, vacancies in A-plus-class buildings fell to under 10%; overall availability stabilized at between 16% and 17%; and demand for prime space has grown so tight that tenants have found no room in which to move or expand.
What’s more, as tallied by JLL, a record 28 new leases in 2024 were signed at rents above $200 per square foot, and a record 212 leases inked for at least $100 per square foot.
The latter category included Blackstone’s lease at 345 Park Ave.
Manhattan leasing volume of 35.9 million square feet in 2024 was only 10% percent below 2019, Avison Young reported on Thursday, handily whipping other large US cities such as Los Angeles and Chicago where leasing was 29% and 33% less than in 2019, respectively
