Empire State Realty to Pay $386M for SoHo Building

December 3, 2025

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A children’s book publisher will continue to occupy its Manhattan headquarters under a sale-leaseback deal.

Scholastic Corp. is closing the chapter on its ownership of its Manhattan headquarters by selling the historic SoHo property to a subsidiary of Empire State Realty Trust Inc. for $386 million, in an all-cash sale-leaseback deal. The sale of the 12-story property at 555-557 Broadway is expected to close later this month.

The 555-557 Broadway office building in the SoHo section of Manhattan — 555-557 Broadway in the SoHo section of Manhattan. *Image courtesy of Empire State Realty Trust Inc*.

Scholastic stated it is unlocking the significant value of its real estate through sale-leasebacks of both the SoHo headquarters and its primary distribution center in Jefferson City, Mo., a strategy consistent with broader commercial property market trends favoring this type of deals.

The children’s book and educational publisher is selling the distribution building to funds managed by affiliates of Fortress Investment Group for gross proceeds of $95 million in cash. The company stated the two transactions, both expected to close by the end of the year, should generate net proceeds of approximately $401 million.

Upon closing of each of the transactions, Scholastic will enter into long-term leases to continue operations at both locations. However, it plans to substantially reduce its footprint at the Manhattan headquarters. Scholastic will lease 222,000 square feet of office space at the building, according to ESRT. The deal calls for a 15-year lease with two 10-year extensions, Scholastic stated.

The Jefferson City deal calls for a 20-year triple net lease with two 10-year extensions with annual rent of $7.6 million.

Scholastic said the sale of the two assets aligns with the company’s plan to improve the efficiency of its balance sheet and create shareholder value. The publisher hired Newmark in June to consider a potential sale-leaseback transaction for all or part of its owned office and retail real estate in New York City, as well as a similar deal for its distribution centers in Jefferson City.

Building highlights

Scholastic acquired the building at 555 Broadway for $255 million from ISE America in March 2014, according to Yardi Matrix data. It had previously been a tenant of the building since 1992 and had owned the adjacent building at 557 Broadway since 2010, Bisnow reported.

Located between Spring and Prince streets with entrances on both Mercer Street and Broadway, the property comprises approximately 368,000 square feet of office space and 28,000 square feet of retail space.

The property is 70 percent leased, including the office lease with Scholastic. The publisher had previously occupied 10 of the 12 floors but is downsizing to the top six floors, according to Crain’s New York Business. The third through fifth floors are vacant.

Convene, a global hospitality company that provides flexible office, meeting and event spaces, agreed in July to lease 32,000 square feet on the second floor. The venue is expected to open in spring 2026 and feature a retail entrance with a welcome desk, seven meeting and event spaces, a 252-person main hall, 16-person boardroom along with studios and gallery spaces.

ESRT said the vacant three-floor block space will provide more than 110,000 square feet of office space in a prime market. Anthony Malkin, ESRT’s chairman & CEO, said in prepared remarks the sale-leaseback deal offers a combination of contractual revenue, embedded growth and significant value-creation potential to the REIT.

The asset was completed between 1889 and 1900 for retail use. It was converted to an office building in 1989. The property had a complete renovation in 1994 and cosmetic upgrades in 2015, according to Yardi Matrix.

Scholastic advisory team

Co-Head of U.S. Capital Markets Adam Spies, Executive Vice Chairman Josh King and Executive Managing Director Avery Silverstein of Newmark represented Scholastic in the Manhattan transaction. Newmark served as exclusive advisor to Scholastic on both sale-leaseback deals. Hogan Lovells served as legal counsel and Gagnier Communications was the strategic communications advisor to Scholastic on both transactions.

ESRT’s NYC activity

ESRT is a New York City-focused REIT with a portfolio of approximately 7.8 million square feet of office space, just under 1 million square feet of retail space and 743 residential units. The REIT’s flagship property is the Empire State Building, a 102-story, Art-Deco-style skyscraper located at 20 W. 34th St. in Midtown South.

The iconic tower, built in 1931, has seen leasing activity in recent months. Law firm Elsberg Baker & Mauri PLLC signed a 39,237-square-foot lease for one full and one partial floor at the skyscraper in July. Newmark also brokered that deal on behalf of both parties, with an assist from an ESRT executive.

A few weeks earlier, Mott MacDonald Inc., a consultancy firm, inked a deal for 25,372 square feet, or a full floor, at the 2.8 million-square-foot tower. Newmark and an in-house executive represented ESRT and Colliers worked on behalf of the tenant in the lease negotiations.

In April, ESRT signed a 77,382-square-foot lease renewal with Gerson Lehrman Group Inc., at its One Grand Central Place office tower in the Murray Hill submarket.