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In a further sign the real estate market is heating up, International Business Machines Corp. has reached a tentative agreement to sell its headquarters building for what would be the highest price paid for a Manhattan office tower in more than five years.
Odyssey Partners L.P., a 12-year-old buyout boutique, has agreed to pay $205 million for the 43-story structure at 590 Madison Ave. At about $200 a square foot, that's the most paid for office space since the market collapsed in the late 1980s.
Spokesmen for IBM and Odyssey declined to comment. IBM has said it wanted to sell the building or lease 300,000 to 500,000 square feet in it as part of its consolidation efforts.
The Odyssey deal comes at a time when the market for both trophy and second-class office buildings is showing strength after flagging for years. Already this year, Morgan Stanley & Co. purchased the new development at 750 Seventh Ave. for $90 million; Smith Barney Shearson Inc. bought 250 West St. for $28.8 million; and Metropolitan Life Insurance Co. sold 366 Madison Ave. to a Hong Kong partnership for $14 million.
In addition, Leucadia National Corp. has signed a contract to buy the American Home Products Building at 685 Third Ave., reportedly for about $50 million. Prudential Insurance Co. expects to get close to its targeted sale price of $70 million for 850 Third Ave., which is being bid on by several investors.
"Within a couple of months the entire investment community that had been sitting on the sidelines has jumped in with both feet," says Peter Hauspurg, president of Eastern Consolidated Properties Inc. "So you have a lot of equity in the market and you're...