Blackstone Group has emerged as the odds-on favorite to win the bidding contest for 590 Madison Avenue, the Plaza District office tower that went up for sale earlier this year asking north of $1 billion.
The private equity giant is among a handful of investors who submitted a second round of bids for the former IBM Building and are awaiting its owner, the State Teachers Retirement System of Ohio, to award the sale, sources told The Real Deal.
Other bidders in contention include SL Green, Tishman Speyer, RXR and RFR, according to people familiar with the process. There’s even a high-net-worth private buyer rumored to be in the mix.
Blackstone, however, has one big advantage: The company has plenty of dry powder to finance the purchase itself. The other bidders would likely have to seek out an investor to close the deal, introducing an element of counterparty risk.
Sellers, especially cautious institutions like pension funds, generally favor buyers who can provide a high certainty of closing. That’s especially true now, as the capital markets are more volatile following President Trump’s tariff tantrum.
No deal has been awarded, and things are subject to change. Ohio Teachers could, in the end, decide not to sell, or another investor could get the deal.
A spokesperson for Blackstone declined to comment, and a representative for Ohio Teachers did not immediately respond.
The pension fund put the 1 million-square-foot tower up for sale earlier this year, eyeing a price tag of $1.1 billion.
People familiar with the process said they doubt the seller will hit its asking price, but expect it to clear $1 billion. If it hits the target, it would be the first New York City sale to crack the $1 billion mark since Google parent company Alphabet bought its Hudson Square office building at 550 Washington Street for $1.97 billion in 2022.
Eastdil Secured is running the sale process and is expected to make a decision on a deal soon.
Some of the finalists have recently made office purchases after years of sitting on the sidelines or — as in Blackstone’s case — have been actively distancing themselves from the office sector.
SL Green just 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 reported last week. And RXR in January acquired a 49% stake in 1211 Sixth Avenue in a deal that valued the building at $1.2 billion.
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.
Offices made up about 60 percent of the company’s global real estate portfolio at the time it bought Sam Zell’s Equity Office Properties for $39 billion in 2007. By 2023, they represented 2 percent.
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Pension fund puts 590 Madison up for sale, seeking more than $1B
Blackstone in talks to acquire 1345 Sixth Avenue