In a two-week period this July, Commercial Observer reported on three Midtown office towers hitting the market.\u00a0<\/p>\n
First came BXP<\/a>\u2019s ground lease at 7 Times Square<\/a>, asking north of $700 million for its slice of the 1.2 million-square-foot tower. Just three days later, two separate office towers made headlines of their own: Empire State Realty Trust\u2019s (ESRT) 1359 Broadway<\/a> was looking for a buyer and hoping to fetch roughly $225 million, while Property & Building Corporation<\/a>\u2019s 10 Bryant Park<\/a> was back on the market for a second try after an $855 million deal fell through in 2022<\/a>. It is now looking to sell for more than $800 million.\u00a0<\/p>\n SEE ALSO: Lower Manhattan Has Become a Model for Other Urban Hubs \u2014 Including Midtown<\/a><\/p>\n A few days later, CO reported that the estate of L.H. Charney sold Midtown\u2019s 1441 Broadway<\/a> for $238 million to a partnership of 60 Guilders and Sentry Realty.\u00a0<\/p>\n The domino-like series of headlines was striking, but the news didn\u2019t stop there.\u00a0<\/p>\n August saw the arrivals of Tishman Speyer\u2019s 6 Grand Central<\/a>, a 770,386-square-foot trophy tower seeking a buyer willing to pay roughly $450 million<\/a>. Then, news broke that China Life Insurance Group was marketing its minority stake in RXR\u2019s Class A tower at 1285 Sixth Avenue<\/a>, angling for a price that would value the building at $1.4 billion.<\/p>\n On the same day China Life Insurance Group\u2019s for-sale stake was reported, sources told CO that ESRT\u2019s 1359 Broadway<\/a> had found its buyer in Thor Equities, which agreed to pay $218 million for the 22-story office tower.<\/p>\n Put simply, New York office investment sales are on the up and up.<\/p>\n This year\u2019s activity followed a promising 2025, in which office investments grew 30 percent<\/a> to exceed $11 billion, according to a JLL analysis. Analysts judged that institutional players were no longer testing the waters, but instead were preparing to re-engage, selectively targeting well-leased assets in proven submarkets.<\/p>\n Their predictions seem to be playing out. Nearly all of the nine-figure office towers hitting the market in recent months are concentrated in prime Midtown and Midtown South corridors, and boast tenant occupancies at 90 percent and above. Manhattan office sales in the second quarter of this year totaled $2.3 billion, according to Cushman & Wakefield, rising 42 percent over the same period in 2025, and on par with the five-year quarterly average.\u00a0<\/p>\n Institutional investors and real estate investment trusts are leading the way in acquiring high-quality assets, and insiders say they\u2019re just getting started.<\/p>\n Gary Phillips, managing director at Eastdil Secured Savills<\/a> and a member of BXP\u2019s 7 Times Square broker team, said on-the-market office towers reported thus far are \u201conly a portion of what\u2019s out there,\u201d and that more are likely to be announced in the coming weeks and months.\u00a0<\/p>\n A quick succession of towers hitting the market could be cause for anxiety, but brokers like Phillips said a majority of sellers are simply striking while the iron is hot. Leasing volumes are on track for their highest yearly leasing total since 2000<\/a>, conversions continue to chip away at office supply<\/a>, and major tenants are signing pricey, long-term leases.<\/p>\n \u201cWe\u2019ve seen a large ramp-up in activity, and a lot of it\u2019s due to the fundamentals on the ground being so strong,\u201d Phillips said. \u201cThe strongest that I can remember.\u201d<\/p>\n He traces the ramp-up back to the fourth quarter of 2024, when his team closed the $255 million sale of Columbia Property Trust\u2019s 799 Broadway<\/a>, a 177,000-square-foot office property, to Savanna.<\/p>\n \u201cThat was the first aha moment, a Class A trophy-style deal, where it exceeded our expectations,\u201d Phillips said. \u201cWe had a ton of activity. Our bid sheet would have been as if it was 10 years ago, meaning we had all the big-name players on it.\u201d<\/p>\n The gap between leasing performance and investment pricing is unusually large right now, Phillips said, with the strength of leasing being proved first, and investors left to catch up.<\/p>\n \u201cIt\u2019s the first time in my career that the leasing fundamentals have led the capital markets by such a wide margin,\u201d Phillips said. \u201cIt\u2019s usually the other way around. People have conviction and are betting on the come. Here, you don\u2019t have to.\u201d<\/p>\n The difficulty of landing a top-shelf office space of their own is perhaps the signal sellers and buyers needed to get moving on the market.\u00a0<\/p>\n \u201cFunnily enough, some of the more institutional groups that we\u2019ve seen have the most conviction in office are the same groups that have had to look for their own space,\u201d Phillips said, although he declined to name names. \u201cThat\u2019s how tight it is out there.\u201d\u00a0<\/p>\n Office brokers, bullish by nature, aren\u2019t alone in their confidence.\u00a0<\/p>\n Dylan Burzinski, senior analyst and head of office and life sciences research at market intelligence firm Green Street<\/a>, said that conviction in the New York City market, plus debt, is driving the sales surge.\u00a0<\/p>\n \u201cOur viewpoint is that it will continue to be the strongest-performing office market in the country over the next few years,\u201d Burzinski said of Manhattan. \u201cPeople have gotten more confident in that outlook, and, when you combine that with more accommodative debt markets, it naturally translates into a higher amount of transaction activity.\u201d<\/p>\n In addition to excellent leasing activity, however, is the real pressure of debt maturities. The overall commercial mortgage-backed securities (CMBS) special servicing rate exceeded 11 percent as of July, according to CMBS tracker Trepp. This year has seen the second-highest distress rates since the Global Financial Crisis.\u00a0<\/p>\n Commercial distress is evident in the ongoing saga at SL Green Realty<\/a> and RXR\u2019s 825 Eighth Avenue. The 2 million-square-foot tower in default has seen occupancy plummet, and it was recently appraised at a fraction of its former value. In the past 12 months, Extell\u2019s Gary Barnett has moved to take control of the tower<\/a> using distressed debt. Cooper Union\u2019s iconic Chrysler Building, too, is stuck in distress and lingers on the market<\/a> amid talks with would-be buyer Tishman Speyer.\u00a0<\/p>\n But that distress is still concentrated at the weaker end of the market, Phillips argues, while the trophy towers are trading on strength.\u00a0<\/p>\n Lenders aren\u2019t in the driver\u2019s seat among the leased-up, Class A assets, said Doug Middleton, vice chairman with CBRE<\/a>\u2019s investment properties group.<\/p>\n Sellers, meanwhile, \u201cthink that the time is right,\u201d Middleton said.<\/p>\n Part of the market\u2019s newfound comfort is a growing acceptance that low interest rates aren\u2019t coming back anytime soon. At the start of the current rate cycle in 2022, the adage was \u201cStay alive \u2019til 2025,\u201d a mantra for the expectation that rates would soon fall. That saying, however catchy, hasn\u2019t quite played out.\u00a0<\/p>\n \u201cThere\u2019s been an ultimate \u2018come to Jesus\u2019 moment where the real estate industry no longer believes that,\u201d Burzinski said. \u201cOr at least people are more comfortable underwriting assets and putting capital to work in this higher rate environment, because it doesn\u2019t seem like rates will be going down, at least significantly, in the near future. So you\u2019ve seen a reset to values and cap rates.\u201d<\/p>\n Rather than betting on rate relief, buyers in the current environment could instead be preparing to underwrite their returns on leasing and rent growth. Other sellers are running out the clock on five- and seven-year funds that need to return capital, said Zach Redding, managing director at Colliers\u2019 Capital Markets group.<\/p>\n \u201cMany of them have not sold because it was not an optimal time to do so, and, if they did, they wouldn\u2019t have been able to return money to their investors,\u201d Redding said. \u201cWe\u2019re at a point now where you do have a genuine opportunity to sell buildings. There\u2019s enough competition where you can drive the price and the terms to a level that you feel comfortable with.\u201d<\/p>\n The verdict of brokers and analysts is that it\u2019s a good time to trade a Class A Manhattan tower as any in recent years. With several such buildings on the market now, it\u2019s time to find out whether buyers agree.\u00a0<\/p>\n The marquee listings make a strong case for themselves.<\/p>\n \u201cThese buildings are now at a point in time where people view it as core or core-plus risk,\u201d said Dylan Kane, another managing director at Colliers\u2019 Capital Markets group. \u201cThey\u2019re not super risky, and that\u2019s really the catalyst here that you\u2019re seeing, and that\u2019s what\u2019s incentivizing these groups to get back into that space. These buildings present a much lower risk profile.\u201d<\/p>\n Pair that with an efficient, liquid and competitive debt and equity market, and the buyer pool at least appears increasingly deep.\u00a0<\/p>\n A few years ago, that market\u2019s active buyer profile resembled a barbell, Phillips said, with private capital buying up Class A towers on one end, converters absorbing obsolete office spaces on the other, and little in between. Today, it\u2019s diversifying.\u00a0<\/p>\n \u201cThat\u2019s been the most positive evolution of the market,\u201d Phillips said. \u201cWhere we have not only the local private capital groups, but also high-net-worth and family offices from around the world active in New York, as well as institutions coming back.\u201d<\/p>\n Buyers are pickier today than they were before the pandemic, however, favoring only the core assets with solid occupancies, and leaving the lower-quality buildings to the converters.\u00a0<\/p>\n \u201cWe\u2019re starting to see some institutional capital come back,\u201d Middleton said. \u201cA lot of it is still driven by the high-net-worth syndicators, especially for the larger deals. The smaller deals, you\u2019re seeing the institutional private equity firms come back in earnest.\u201d<\/p>\n The buyers with the most experience in New York City have already demonstrated conviction in Class A bids. Norges Bank Investment Management and Beacon Capital Partners bought <\/a>Silverstein Properties\u2019 1177 Avenue of the Americas<\/a> in September of last year, valued at $571.1 million. In January, SL Green Realty snapped up Blackstone\u2019s Park Avenue Tower<\/a> for $730 million. A few months later, Vornado Realty Trust acquired Zhang Xin\u2019s 49 percent stake<\/a> in Fisher Brother\u2019s Park Avenue Plaza.<\/p>\n \u201cIf they\u2019re the ones that have the most conviction buying in this market, that should be a giant neon blinking \u2018Buy\u2019 sign to the rest of the world,\u201d Phillips said.\u00a0<\/p>\n As comfort has accrued, so has the capital. Commercial real estate liquidity is surging, according to JLL\u2019s Bid Intensity Index, with investor bidding and lender competition hitting annual highs this summer. Investment sales are following the credit recovery. In July, the index reported the second-highest unique bidder count since the index started in 2021.\u00a0<\/p>\n Still, the pool of active buyers capable of notching $700 million-plus deals is on the shallower end of where it was in the years preceding the COVID-19 pandemic. In those years, foreign buyers were engaging aggressively alongside the city\u2019s institutions.\u00a0<\/p>\n \u201cThe Asian investors who were prevalent in 2014 to 2016, they\u2019re not really there at this point in time, so we need a little bit more international capital to return to start to push pricing,\u201d Middleton said.<\/p>\n The pace of marquee deals still has a ways to go. Green Street\u2019s Sale Comps Database shows only nine single-property office buildings traded for at least $700 million since 2020. Just two of those took place after 2022: A $1.08 billion sale of 590 Madison Avenue<\/a> to RXR and Elliott Investment Management, and SL Green\u2019s Park Avenue Tower purchase.\u00a0<\/p>\n Buyers who are engaging, Redding said, will benefit from a basis reset. Towers are no longer trading for what they were in the early 2000s. The $571 million value of Silverstein Properties<\/a>\u2019\u00a0 1177 Avenue of the Americas sale marked a significant discount from the more than $1 billion it purchased the Midtown building for with pension fund CalSTRS in 2007.<\/p>\n \u201cYou\u2019re really buying yield on a reset basis,\u201d Redding said, pointing to sky-high rents this year, including the $340 per square foot rent<\/a>, a likely record, at Soloviev Group<\/a>\u2019s 9 West 57th Street in April.<\/p>\n Buyers are getting high-quality tenants into the bargain, too. See Property & Building Corporation\u2019s 10 Bryant Park, where Amazon signed on for 330,000 square feet<\/a> in April of last year, and gym brand Life Time leased its own 52,000-square-foot space<\/a> two months later.<\/p>\n Every office tower purchase, however, is a bet on uncertainties, like continued rent growth and cap-rate compression, both of which would push prices higher. Bigger money needs to come back in force, partners willing to take a 49 percent stake in towers are still scarce, and recapitalizations remain prevalent, Middleton said.\u00a0<\/p>\n Today\u2019s market needs more data points.<\/p>\n \u201cSome sellers, whether they have in-place debt that\u2019s accretive, they think they can get some enhanced yields to potential buyers, so they\u2019re testing the water,\u201d Middleton said. \u201cSome of these cases will be interesting to see if the sellers actually sell, or if they\u2019re going to stick to their marks.\u201d<\/p>\n The reasons any given tower is trading resist easy answers. Some sellers have been waiting several years for this present moment to arrive, while others are at the end of their fund life, and a few could be facing debt pressures.\u00a0<\/p>\n \u201cThe one thing that we do know is that volatility is the new norm,\u201d Phillips said. \u201cSo waiting an extra six to nine months for good news to happen isn\u2019t necessarily a winning strategy at this point.\u201d<\/p>\n But, from where he\u2019s sitting, Phillips is looking forward to the rest of 2026.\u00a0<\/p>\n \u201cWe\u2019re seeing larger deals get done again, and there\u2019s going to be some large deal announcements in the second half of the year,\u201d he said, adding that those deals will likely include new office towers arriving on the market, and others departing for north of $700 million.<\/p>\n