Blackstone set for New York office comeback with Midtown tower
A deal would be the firm’s first notable office transaction in the city since three years ago
BLACKSTONE is nearing an agreement to purchase a Midtown Manhattan tower, which would mark a return to New York City office dealmaking for the world’s biggest real estate investor.
The alternative asset manager is in talks to buy 1345 Avenue of the Americas, a 50-storey skyscraper spanning 1.9 million square feet, said people familiar with the matter.
Blackstone is betting the worst is over for New York’s beleaguered office market, anticipating rents will surge for top-tier space, the people said, asking not to be identified as the deal is not yet closed.
A representative for Blackstone declined to comment. A representative for Fisher Brothers, which is selling the property to Blackstone, did not respond to e-mails seeking comment outside of US business hours.
Deliberations are ongoing and there is no certainty a deal will be concluded, the people said.
It was not immediately possible to confirm the price Blackstone is paying for the building; however, ratings reports for the loans secured against the property suggest its valuation has plunged. S&P Global appraised its value at US$896 million in a November 2024 report, down from US$1.25 billion when the loan was issued.
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That is despite securing a string of new leases, including the largest deal signed in 2023: a 765,000-square-foot lease to law firm Paul, Weiss, Rifkind, Wharton & Garrison, which moved into space vacated by AllianceBernstein after it moved its headquarters to Nashville, Tennessee.
New York’s office availability rate reached 16.5 per cent at the end of 2024, based on a report published earlier this month by broker Colliers International Group, roughly double its level before the pandemic hit.
Still, that was the lowest since September 2022, thanks to leasing volumes that reached the highest in five years during 2024, Colliers data showed.
The elevated vacancy rate also masks a wide variation in the performance of New York’s office market and even within small areas like Midtown’s Plaza district, where the five most in-demand buildings commanded rents that were four times higher than those of the least-popular properties.
That has lured investors such as Blackstone back to the market after an extended period in which the private equity giant whittled away its US office exposure.
Traditional US offices account for less than 2 per cent of the firm’s real estate holdings that are now dominated by apartments, warehouses and data centres. That is down from more than 50 per cent before the 2008 financial crisis.
A deal would be the first notable New York office transaction by Blackstone since it bought a 49 per cent stake in One Manhattan West almost three years ago, a transaction that valued the building at US$2.85 billion.
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