Possible Paramount Group Sale to Rithm Signals Confidence in Manhattan Office Market

Rithm Capital’s $1.6 billion bid for Paramount Group highlights resilience in New York real estate, but shareholders and analysts question valuation and future portfolio strategy.

Rithm Capital’s prospective acquisition of Paramount Group is being hailed as a strong vote of confidence in Manhattan’s office market at a time when commercial real estate faces uncertainty nationwide. Paramount, which owns 11 buildings in Manhattan and five in San Francisco, announced in April that it was exploring “strategic alternatives.” After months of speculation, Rithm emerged as the leading bidder, agreeing to acquire the company for $1.6 billion, or $6.60 per share.

If approved by Paramount shareholders, the deal would mark Rithm’s first major foray into bricks-and-mortar holdings, giving the investment and asset management firm a significant 13.1 million-square-foot portfolio. Rithm, founded by Fortress in 2013 and fully self-managed since 2022, already oversees more than $100 billion in investable assets.

A Generational Opportunity

Rithm CEO Michael Nierenberg, who maintains a low public profile, described the acquisition as a “generational opportunity” that will expand Rithm’s commercial real estate and owner-operator model. While declining to comment directly due to SEC disclosure rules, he expressed enthusiasm through a spokesperson about welcoming Paramount’s “excellent” team.

Industry sources suggest that the new ownership could trigger a reshuffling of Paramount’s Manhattan portfolio, which is currently 88.1% leased – the highest occupancy since early 2022. Several buildings may receive much-needed capital upgrades, while select assets in both New York and San Francisco could be sold off following a detailed review.

The Spotlight on 60 Wall Street

One property drawing particular attention is 60 Wall Street, a 1.6 million-square-foot tower currently undergoing a $250 million modernization. The landmark building, however, is still fully vacant, with Paramount holding only a 5% equity stake. Law firm Sullivan & Cromwell, Moody’s, and Aon have all reportedly considered leasing space there, and brokers indicate strong activity even without finalized deals.

Other Midtown assets, including 900 Third Avenue and 31 West 52nd Street, have largely avoided major renovation headlines, apart from lobby improvements. Market insiders believe Rithm’s ownership could bring renewed investment into these properties.

Competition and Valuation Concerns

Paramount attracted interest from several prominent players, including SL Green and Blackstone, before settling on Rithm’s offer. However, the $1.6 billion price tag has sparked debate. Some shareholders and analysts argue the valuation is too low given the long-term potential of Paramount’s assets.

The transaction also comes as the SEC reportedly investigates certain payments to Paramount CEO Alfred Behler, raising questions about how potential liabilities may be handled under new ownership. Typically, buyers assume such obligations.

San Francisco Challenges

While Paramount’s Manhattan properties are rebounding, its five San Francisco holdings continue to face headwinds tied to the city’s slower recovery. Still, insiders believe Rithm will “examine every asset very closely” and could pursue selective sales or repositioning strategies on the West Coast.

Market Context and Industry Movement

Paramount’s leasing activity compares modestly with rivals like SL Green, which boasts higher occupancy rates and stronger asking rents. Still, the deal signals optimism that Manhattan’s office sector – long considered the benchmark for U.S. commercial real estate – remains resilient despite economic challenges.

Elsewhere in the market, milestones continue:

• 150 Fifth Avenue has reached 100% occupancy after BAM Labs signed its first U.S. lease, joining Mastercard, which occupies 227,500 square feet.
• At 1515 Broadway, despite SL Green’s failed Times Square casino bid with Caesars Resorts, the property remains stable. Paramount Global, the anchor tenant, is locked into a lease until 2031, ensuring reliable rent flows. The building also benefits from strong tourism traffic with The Lion King drawing audiences to the Minskoff Theatre inside.

Looking Ahead

The Paramount–Rithm deal is more than just a real estate transaction. It represents a potential turning point in the Manhattan office market, reinforcing faith in the city’s long-term strength while raising critical questions about valuation, asset strategy, and leadership accountability.

If shareholders give their approval, Rithm Capital will inherit not only a prestigious portfolio but also the challenge of revitalizing underperforming assets and reassuring skeptical investors. As one insider summed it up: “They’re going to examine every asset very closely – in New York as well as San Francisco.”