Carlyle Group sells prime office tower in Manhattan for US$1.3 billion

Carlyle Group's US$1.3 billion deal to sell 650 Madison Avenue will set a record based on the per-sq-ft price for the office tower, driven by its retail space in the heart of midtown Manhattan's Plaza district.

Crown Acquisitions, based in New York, and Highgate Holdings agreed to buy the 600,000 sq ft building, Crown said. The property has about 75,000 sq ft of retail space in a prime tourist and office area.

The purchase is the largest of an entire building in the US since Google's US$1.8 billion acquisition of 111 Eighth Avenue in Manhattan in late 2010, and on a sq-ft basis it exceeds the record of US$1,583 paid for 450 Park Avenue in 2007.

In another deal for a trophy Plaza district property, a 40 per cent stake in the General Motors Building was sold to the families of Chinese real estate developer Zhang Xin and Brazil's Safra banking empire, said a person familiar with the transaction.

"The true trophy properties are in a league of their own," said Robert Stuckey, managing director and head of US real estate at Washington-based Carlyle. "There's just a quantum leap in both rents and building values when you're in that category."

The area is known as the Plaza district because of its proximity to the landmark Plaza Hotel, two blocks west of 650 Madison. It commands some of the priciest office rents in America, and is home to notable retail stores including Bergdorf Goodman, Tiffany, FAO Schwarz and Apple's outlet at the bottom of the GM Building.