Scott Rechler’s RXR is buying 590 Madison Avenue for close to $1.1 billion — the most expensive office deal in New York in several years.
Rechler’s company on Friday signed a letter of intent to buy the 1 million-square-foot tower from State Teachers Retirement System of Ohio, the state’s teacher pension fund, sources told The Real Deal.
The price is “closer to $1.1 billion than it is to $1 billion,” said a source familiar with the deal.
There was intense competition for the building — one of the few trophy office properties in the Plaza District — and it drew attention from many of the biggest investors.
Tishman Speyer, Blackstone Group, SL Green and RFR had all been in the mix late in the process. Sources told TRD in April that Blackstone was the odds-on favorite to emerge as a buyer, and there was also a high-net-worth European investor who showed strong interest in buying the building.
The price, however, gave some bidders pause for concern. Several floated the idea of purchasing the building through installments, the Commercial Observer reported. But ultimately, the competition for the property led to a full sale.
A spokesperson for RXR declined to comment and a representative for STRS Ohio could not be immediately reached.
An Eastdil Secured team led by Will Silverman and Gary Phillips negotiated the deal.
The price makes the deal the first New York City sale to crack the $1 billion mark since Alphabet bought its Hudson Square office building. The Google parent company paid $1.97 billion for the property at 550 Washington Street in 2022.
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The 42-story 590 Madison, built in 1983, served as the headquarters for IBM. The Ohio pension fund spent $80 million over the past 10 years upgrading the building, including a new roof deck and full-floor amenity space.
The property is 85 percent leased.
RXR, meanwhile, has been increasingly active lately as a buyer. The company earlier this year bought a stake in Ivanhoe Cambridge’s 1211 Sixth Avenue, and then secured an extension on the tower’s $1 billion mortgage.
Many of the bidders interested in 590 Madison have returned to the market after sitting on the sidelines for the past several years.
SL Green recently closed on its $130 million purchase of the office condominium at 500 Park Avenue. The REIT firm previously bought 450 Park Avenue in 2022 for $445 million — which was then its first office purchase since 2018.
Tishman Speyer is in contract to buy the 150,000-square-foot building at 148 Lafayette Street in Soho for around $120 million, as TRD recently reported.
Blackstone, meanwhile, is negotiating to buy a stake in the 1.9 million-square-foot 1345 Sixth Avenue. Ever since it decided to hand back the keys on its office building at 1740 Broadway in 2022, the private equity giant has been publicly talking about its more than decade-long pullback from the office sector.