All These Manhattan Office Building Sales — What’s the Deal?

It’s been quite busy for office building sales in New York City, with several major office properties sold in just the past few weeks — and you guessed it, they’re all in Midtown.

In the largest deal, Silverstein Properties and the California State Teachers’ Retirement System offloaded 1177 Avenue of the Americas to Norges Bank Investment Management and Beacon Capital Partners for a whopping $571.1 million. The 47-story, 1 million-square-foot office tower is home to tenants such as law firm HSF Kramer and Practising Law Institute.

Meanwhile, Cohen Brothers Realty sold off two of its office towers in the past two weeks, including the 36-story 623 Fifth Avenue to Vornado Realty Trust for $218 million and the 300,000-square-foot 3 East 54th Street to an undisclosed buyer for $188 million. The two sales come during some financial struggles for Charles Cohen, who is currently in need of around $200 million for lender repayments, according to Crain’s New York Business.

Overall, JLL said deal volume for large office buildings is up 130 percent in Manhattan year-over-year. And $897.5 million in office sales have already been recorded during the second quarter of 2025, representing a 36 percent increase from the previous quarter, according to data from Avison Young.

But why the sudden spike in office building sales? It’s simple, according to JLL’s Drew Isaacson: A steady surge in office leasing is boosting investor confidence.

“It’s not a coincidence, it’s not a flash in the pan,” Isaacson, senior managing director of capital markets at JLL, told Commercial Observer. “This is the capital markets starting to wake back up and pursue office because the fundamentals are so strong. … At a fundamental level, the properties are performing incredibly well, because the leasing market’s performing incredibly well.”

Manhattan’s monthly office leasing activity increased by more than 20 percent from July to August, with 3.7 million square feet leased in August, a recent report from Colliers found. That’s compared to the 2.6 million square feet leased in August 2024.

As for tenants, financial services firms led the charge last month, with big leases such as Deloitte’s deal for 807,000 square feet at 70 Hudson Yards and Piper Sandler Companies’ lease for 136,175 square feet at 1301 Avenue of the Americas. But some other tenant types got in the mix, including fresh pet food company The Farmer’s Dog, which took 58,000 square feet at 568 Broadway.

While office leasing was expected to do well this year, office investments weren’t expected to ramp up quite as much as they did. But, to brokers and analysts, the surge in sales wasn’t a surprise.

“It may be surprising to some, but for those of us working on office every day, momentum has been building, and we expect it to continue,” said Zach Redding, managing director for capital markets at Colliers. “Both public and private capital recognize the opportunities and are acting on them, along with fundamentals moving in the right direction.”

Steady office leasing is expected to boost even more office investments in Manhattan during the second half of this year, bringing the market closer to its pre-pandemic numbers, JLL said.

Another reason why office building sales are picking up? Investors and lenders seem to finally be on the same page.

“The number of investors that went from being ‘office curious’ to ‘office serious,’ there’s been a tremendous uptick in that in the past 12 months,” Isaacson said. “And you had that same trend line with lenders. It lagged by about six months. So now that you’re seeing capital formation, both debt and equity, it allows new transactions to get done in a way that weren’t previously achievable.”

June was the strongest month in loan requests since 2022, signaling an “increased interest” in investment sales, according to JLL. A lot of that interest is coming from an “increasing institutional investor appetite for high-quality office,” JLL said.

That was seen in Blackstone’s $850 million deal in May to secure a nearly 50 percent stake in 1345 Avenue of the Americas, as well as in Amazon’s $456 million deal, also in May, to buy 522 Fifth Avenue.

While investors and lenders are largely looking at high-end office tower properties, they’re also looking at older, lower-quality buildings ripe for discounts and redevelopment. For example, the 1931-built 444 Madison Avenue just sold for $50 million to Savanna at a $264 million discount.

And former Brooks Brothers owner Claudio Del Vecchio recently sold the 1915-built 346 Madison Avenue for $160 million to SL Green Realty, which plans to redevelop the property and an adjacent building it also bought into a 41-story office skyscraper, according to New York YIMBY.

The redevelopments come as ground-up construction for office properties in Manhattan becomes more limited. However, that limitation likely “improves the outlook for existing assets” and causes more investors to be ready to deploy capital, according to a report from CBRE.

Office-to-residential conversions, meanwhile, are also overall helping the office market, as “obsolete office” is being retired, and displaced tenants are searching for new space.

“With more than 20 million square feet of office-to-residential conversions, obsolete office is being taken offline, which is further helping absorption in the office market today,” Redding said.

Another major factor boosting office investors’ confidence lately is return-to-office mandates. Fifty-seven percent of Manhattan office workers are at their workplace on an average weekday, which equates to 76 percent of office workers’ pre-pandemic attendance, according to a March report from the Partnership for New York City, a business booster group.

In addition, New York City’s attendance rates midway through 2025 exceeded the national rate by 8 percent and outperformed any other U.S. city, according to JLL.

“Return-to-office mandates are a driving factor, in addition to the fact that tenants are planning for growth,” Isaacson said. “It’s pretty clear now that hybrid work is not necessarily going to be the way that most tenants utilize space. And so with more certainty around what their business and space needs are, you’re seeing those tenants engage with the market at a similar time, which means that you’re seeing a tremendous demand increase simultaneously.”

Office buildings near major transit hubs in New York City are doing especially well on the return-to-office front, as properties near Grand Central Terminal and Pennsylvania Station are continuing to “outperform in both return-to-office compliance and leasing velocity,” according to a recent report from JLL.

In addition, with New Haven line trains expected to run into Penn Station in 2027, there should be even more demand for not just transportation-adjacent office properties, but for all office buildings.

“You’re going to see continued demand from investors, and you’re going to see more product coming to the market,” Isaacson said. “There’s demand across the spectrum, and so I think that’s just going to continue to increase.”

And, as far as investors go, there’s likely going to be more institutional buyers as opposed to sellers.

“The hope is that we’ll start to see a slow reversal of the trend,” said David Giancola, senior managing director of capital markets at JLL. “Over the last few years, it’s been institutional sellers and private capital buyers. [That trend] is hopefully going to reverse itself, and we’ll start to see more institutional participation on the buy side. We’re still in the early innings, but we’re starting to see the larger players do that.”

Isabelle Durso can be reached at idurso@commercialobserver.com.