U.S. commercial real estate investment and management firm RXR has a acquired a 49% stake in a New York City office building from Ivanhoé Cambridge.

The U.S. private-equity company ranks among the largest owners of commercial and residential properties in the New York region. The tower is located at 1211 Avenue of the Americas in Manhattan, in the heart of the Rockefeller Center/Midtown submarket.

RXR will invest $300 million in the building’s modernization program.

The transaction establishes a partnership between RXR and Ivanhoé Cambridge, the real estate arm of Montreal-based pension fund Caisse de Dépôt et Placement du Québec (CDPQ) combining their expertise to reposition the two-million-square-foot property.

“Through this partnership, we intend to leverage RXR’s expertise in New York’s real estate market and invest in transforming one of the city’s most iconic buildings.”said Rana Ghorayeb, executive vice-president and head of real Estate for CDPQ/Ivanhoé Cambridge.

The redevelopment will include a reimagined multi-tenant lobby, a revitalized plaza, and new amenities such as a wellness centre, conference rooms, and a modern amenity centre.

“This transaction underscores our strong conviction in New York City’s office market and its unparalleled resiliency,” said Scott Rechler, chairman and CEO of New York-based RXR. “By partnering with Ivanhoé Cambridge to transform this iconic tower into a workplace that meets the demands of today’s global companies, we’re demonstrating that well-located, high-quality office buildings can thrive in a post-pandemic world.

“We’re not just investing in a building – we’re investing in the next chapter of New York City’s growth and recovery.”

Ivanhoé Cambridge has owned the landmark for more than a decade. The partial sale aligns with its strategy to enhance workplace offerings for top-tier tenants in competitive markets, said the company.

The building, home to long-term tenants such as FOX and News Corp, retains approximately 55% occupancy through 2042. However, a law firm’s upcoming departure in 2028 will create a rare opportunity with more than 600,000 sf of premium space becoming available. Positioned as a building within a building, this contiguous space is expected to attract global companies seeking top-tier office environments in a market where space remains scarce, said Ivanhoé Cambridge and RXR.

As the new operator, RXR plans to elevate the tenant experience with its RXO program. The initiative includes a dedicated hospitality team to curate programming such as lobby activations, educational workshops, and wellness activities, aiming to redefine the modern office experience.

Advisors for the transaction included Strategic Capital Alliance and Newmark.

Rechler told Bloomberg that RXR and Ivanhoé Cambridge plan to have conversations with lenders about a US$1-billion debt on the building that comes due in August.

RXR owns and manages approximately 30.5 msf of commercial properties and more than 9,800 residential units. Its portfolio spans New York City and fast-growing markets such as Phoenix, Denver, and Raleigh, N.C. He also told Bloomberg that RXR is only assuming 49% of the debt and the renovations costs.

Ivanhoé Cambridge manages a portfolio of about 1,500 properties worldwide. Focused on sustainability and community well-being, it aims to reduce the environmental footprint of its developments.

Image: Ivanhoé Cambridge