Saudi Arabia’s government fund is partnering with Related Companies to acquire a two-thirds stake in a site at 625 Madison Ave. in Manhattan, where a new skyscraper is planned. The total cost for the site and its development is projected to exceed $1 billion, according to sources familiar with the deal. The fund has already invested $200 million into the project, although its final contribution is still being determined.
Initially, Related Cos. envisioned a mixed-use development for the location, including residential units, retail space and a hotel. However, the firm recently pivoted its plans and is now considering an 840,000-square-foot office building, instead, aiming to capitalize on the robust demand among businesses for premium office space in New York City.
Now jointly owned by the New York developer and the Saudi government fund, the 625 Madison Ave. site — just a block from Central Park — was acquired last year for more than $600 million. The partnership’s immediate priority was to demolish the existing office building, which had a notable history as both Nabisco’s former headquarters and, at one time, Related’s own HQ, as well.
The five-block area surrounding Related’s site has emerged as a particularly sought-after location for developers: 625 Madison Ave. sits only a block from Extell’s proposed luxury supertall at 655 Madison Ave. and the former Barneys store at 660 Madison Ave., where Ashkenazy Acquisition Corp. hopes to attract a billion-dollar buyer. The site is also near 590 Madison Ave., which RXR is under contract to purchase for $1.1 billion.
With assets totaling approximately $1 trillion, Saudi Arabia’s Public Investment Fund (PIF) stands as one of the globe’s largest investors and is a significant overseas fund making a return to the New York market.
PIF shares a close relationship with Related Companies, which is renowned for its extensive Hudson Yards development on Manhattan’s west side. This partnership deepened in 2020 when the Saudi fund made a debt investment in Related, convertible into a 15% equity stake. Since then, the two entities have collaborated closely on numerous real estate ventures, including the planned skyscraper at 625 Madison Ave. in Manhattan.
Historically, the Saudi Public Investment Fund’s involvement in real estate outside of Saudi Arabia was relatively modest with most of its property-focused capital directed toward domestic megaprojects designed to transform the nation.
However, in the last few years, the fund has significantly expanded its global real estate footprint by acquiring stakes in several high-profile international properties and brands. This expansion includes last year’s acquisition of a 40% stake in Selfridges — a high-end U.K. department store group — and a 49% stake in the upscale hotel chain Rocco Forte.
