By Peter Grant

SL Green Realty has agreed to pay $730 million for a Midtown Manhattan office tower near Park Avenue, raising its bet that New York City will continue to strengthen as the nation's top-performing office market.

The city's largest office landlord plans to announce the transaction on Wednesday when it is expected also to post strong third-quarter earnings, according to people familiar with the matter.

SL Green's deal to buy the 36-story building, called Park Avenue Tower, is one of the largest office building sales of the year and shows that sales momentum for desirable office buildings in prime locations is heating up. The 620,000-square-foot building on 55th Street is more than 95% leased.

Over the summer, New York property owner RXR completed an even larger deal. The firm and its partners purchased 590 Madison Avenue, the former IBM building, for $1.1 billion. That was the first New York office sale to exceed $1 billion in nearly three years, a milestone set regularly during boom years in the office market during the previous decade.

Property values plunged after the shift to remote work reduced demand for office space in most cities. The sharp rise in interest rates further eroded office building values along with the broader commercial real-estate sector.

But with the Federal Reserve starting to cut interest rates, the property market is showing signs of life. That is especially true in New York where the supply and demand trends are looking good for landlords. During the first six months of this year, investors purchased $3.5 billion of Manhattan office buildings, compared with $2.3 billion in the same time period in 2024.

Another reason the sales market is rebounding: New York office building prices have fallen 45% since their pre-pandemic peaks, according to an MSCI index.

"That's discount enough to get some buyers and sellers back together," said Jim Costello, MSCI executive director of research.

Office building prices have stabilized and leasing is ramping up. But sale prices are still well below peak levels. Blackstone purchased Park Avenue Tower in 2014, when prices were near the highwater mark, for $750 million, or about $20 million more than SL Green is paying.

SL Green is also expected to announce Wednesday that it has sold a 5% stake in its signature Manhattan development at One Vanderbilt Avenue to Japan's Mori Building at a price that values the whole building at $4.7 billion. Mori purchased an 11% stake in the building late last year at the same valuation. SL Green still owns a 55% stake in the property.

Write to Peter Grant at peter.grant@wsj.com

(END) Dow Jones Newswires

October 15, 2025 15:52 ET (19:52 GMT)

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