RXR has made it official with its closing of a massive office deal in Midtown Manhattan. The company confirmed that its $1.08 billion buy of 590 Madison Avenue marks the largest non-user office acquisition in NYC since 2018.
The New York-based firm said it teamed up with Elliott Investment Management LP on the purchase. Apollo Global Management provided a senior mortgage to support the financing, with Newmark representing RXR as a capital advisor and Eastdil Secured acting on behalf of the seller, STRS Ohio.
The Real Deal initially broke the news in May, noting that the range was close to $1.1 billion.
RXR said in a statement that the move aligns with its "office recovery strategy," where it looks to scoop up Class A and trophy properties in the asset class at a discount, with the belief that they will wind up "long-term winners." Specifically, the developer said it is looking to capitalize on the lack of quality office space on the market in Manhattan, as supply shrinks and demand remains strong. In fact, the latest report from Colliers revealed that the borough's 15.2 percent availability rate in July marked the lowest seen since January 2021. Also, Manhattan's office sector is poised to have its best year of leasing in six years after posting roughly 3.01 million square feet in signings during the month, according to the CRE firm.
"This acquisition underscores RXR’s conviction in the strength of the Manhattan office market," Scott Rechler, chairman and CEO of RXR, said.
"Throughout the depths of the office cycle, we have been strategically acquiring best-in-class properties in irreplaceable locations at substantial discounts to replacement cost. 590 Madison, one of Manhattan’s premier office assets, represents exactly the kind of trophy asset that will continue to command premium rents and attract the most sought-after companies."
RXR's portfolio shows that all of its office assets are located in New York City and Long Island.
Regarding the 590 Madison purchase, the property has undergone more than $100 million in renovations, which includes a newly implemented 21,000-square-foot amenity suite, costing over $40 million. The 42-story trophy building's tenant base features a mix of financial service providers and fashion brands, including Apollo, Louis Vuitton and Tiger Management. Also, RXR noted that 300,000 square feet of new leases have been struck at the one-million-square-foot asset. As of May, the building was 85 percent leased.
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