Scott Rechler’s RXR has finalized a significant deal to acquire the Plaza District skyscraper at 590 Madison Ave. by placing a $50 million deposit. Approximately 3.5 weeks prior, the company signed a letter of intent to purchase the building from the STRS Ohio state teachers’ pension fund for nearly $1.1 billion.
This acquisition marks a notable milestone as the first New York City office sale to exceed the $1 billion threshold since Google’s $2.1 billion purchase of its Hudson Square headquarters in 2022.
590 Madison Avenue in Manhattan, image courtesy of CommercialEdge
Upon closing, Rechler will finally secure a property that he has long pursued: RXR had previously submitted an offer to buy the former IBM building, although the precise timing of that prior bid remains unclear. This earlier attempt could have coincided with STRS Ohio’s initial offering of the 1-million-square-foot tower for sale in 2018 or last year, when RXR made an unsolicited offer.
Regardless, 590 Madison Ave. has consistently garnered significant interest, largely due to its status as one of the limited number of trophy office properties in the Plaza District. Prominent investors — such as Tishman Speyer, Blackstone Group, SL Green and RFR — were reportedly all involved late in the bidding process.
However, the asking price gave potential buyers some reservations, and several suggested purchasing the building through installments. In the end, the intense competition for the property led to an agreement for a full sale. The next step for RXR toward finalizing the acquisition is the signing of the contract. The deal is officially slated to close by July 30, although one source indicates that it will likely close sometime in mid-July.
An Eastdil Secured team headed by Will Silverman and Gary Phillips brokered the deal.
A spokesperson for RXR declined to comment, and a representative for STRS Ohio did not immediately respond to inquiries.
RXR’s relationship with the pension fund extends beyond this deal: STRS Ohio is also Rechler’s partner on his Amazon-leased warehouse located in Maspeth, Queens, at 55-15 Grand Ave., which RXR acquired in 2018. Earlier this year, RXR also obtained a 49% stake in Ivanhoé Cambridge’s 1211 Sixth Ave. office tower.
Looking for office space for lease in Manhattan or other top U.S. markets? Visit the CommercialCafe.com homepage to start your search for real estate investment opportunities.
