SL Green is selling a 414K SF piece of its Lipstick Building for $300M, one of the largest office deals of the year so far.

Memorial Sloan Kettering bought the office condominium at 885 Third Ave. and plans to consolidate research and administrative offices to the space vacated by Latham & Watkins, the New York Post reports.

SL Green still owns nearly 219K SF in the property, of which almost 92% is leased, per the Post. The real estate investment trust, which is the largest owner of commercial space in New York, has had full control of the property since 2020 and has been running a repositioning of its amenities and infrastructure. Newmark represented both parties in the sale.

The deal takes 414K SF of office availability off the board in Manhattan, which has experienced record high vacancy rates in the last two years. Boroughwide availability in August was at 16.7%, its lowest level since April 2021, per Colliers data. Midtown has also seen several high-profile departures in recent months.

Hours before the Lipstick Building deal was reported, news broke that SL Green is converting its $139M in mezzanine debt into equity at RXR's major upgrade of 5 Times Square in a $1.3B financing deal.

The deals reflects something of a trend of the city's major office REITs, with several selling older buildings in their portfolios amid increased tenant interest in new construction.

SL Green President Andrew Mathias said on the company's second-quarter earnings call that the firm has been on "a very aggressive asset disposition strategy" since 2015, and its portfolio largely reflects that.

"Sure, there's assets we own that we've stabilized or that the income profile doesn't show the kind of growth that other assets we own do and generally, those are sort of our next sale candidates, if you will," Mathias said, according to a Seeking Alpha transcript.

Vornado reportedly closed this week on a deal to sell 40 Fulton to investor David Werner paying between $105M and $110M, The Real Deal reports. That price is a 20% discount on its original asking price.

Vornado President and Chief Financial Officer Michael Franco said on an earnings call in May that the firm was planning to bring the 249K SF office tower between Pearl and Cliff streets in Lower Manhattan to market, describing it is a “fine” asset but one that doesn’t fit into what the company wants to own five or 10 years from now.

“We’re going to prune the portfolio,” Franco said at the time. "We’re going to continue to upgrade, make sure we own assets that we do believe are going to reflect what tenants want or we can push rents, most importantly."

The average asking rent was $75.11 per SF in Manhattan in August, up 3.3% from a year ago.