Private equity giant Blackstone, the world’s largest commercial property owner, is expanding its midtown Manhattan home in a boost of confidence for a New York corridor known for its corporate headquarters.

Blackstone is close to inking a deal to enlarge its footprint at 345 Park Ave., between East 51st and 52nd streets, to 1.06 million square feet, a person familiar with the situation told CoStar News. The person said the deal will extend Blackstone’s lease at the Rudin Management-owned property through December 2034, meaning the firm will occupy 55% of the building across 28 floors, up from the current 42% across 21 floors.

Blackstone moved into the building with a two-floor, 70,000-square-foot lease in 1988, three years after Blackstone Chief Executive Stephen Schwarzman co-founded the firm. The current lease, spanning 719,000 square feet, is set to expire in June 2027, according to CoStar data.

With this expansion, Blackstone, which also has a footprint nearby at 601 Lexington Ave. between East 53rd and 54th streets, becomes New York’s seventh-largest commercial office tenant, occupying a total of 1.4 million square feet, the person said. The deal, earlier reported by Business Insider, represents the largest commercial office lease executed in New York since 2022 and the fourth-largest lease transaction since 2019, the person added.

“We are expanding our commitment to our New York-based workforce, Midtown Manhattan and New York City with this extension,” a Blackstone spokesperson confirmed to CoStar News in an emailed statement, adding that Rudin “continues to be a wonderful long-term partner.”

The lease also includes upgrades such as a fitness center, the person familiar with the matter said. The 44-story, 1.9 million-square-foot building, designed by Emery Roth & Sons and opened in 1969, features views across midtown, Central Park, the Upper East Side and the East River and already has amenities such as a parking garage and bike storage, according to Rudin’s property page.

“The decision of a premier financial services firm such as Blackstone to extend and expand its footprint is a testament to the long-term resiliency of New York City,” a Rudin spokesperson said in an emailed statement.

Blackstone’s headquarters expansion comes as the investment giant attracts capital with its assets under management crossing $1 trillion last year and having expanded to $1.06 trillion in the first quarter. Against the backdrop of elevated interest rates that raised industrywide borrowing costs and dented investment activity, its real estate business has posted positive investment performance in the first quarter after a decline in the fourth quarter and the past 12 months.

While Blackstone has cut its office exposure, with U.S. office buildings representing just 1% of its real estate portfolio, Jonathan Gray, Blackstone's president and chief operating officer, said in April the sector, where demand was curtailed by the effect of remote work, also may present some opportunities.

Blackstone’s decision to stay put in midtown Manhattan is another example that Park Avenue, hard hit during the onset of the pandemic because of its predominantly office-centric nature, has proved naysayers wrong. It has shown solid demand despite what’s often pitched as the live-work-play appeal of neighborhoods such as midtown South, Lower Manhattan and Hudson Yards that have led some major firms to depart midtown Manhattan.

For instance, global accounting firm KPMG, 345 Park Ave.’s second-largest tenant after Blackstone, said in 2022 it’s leased about 450,000 square feet at Brookfield Properties’ Two Manhattan West in a planned relocation to the new 58-story building, connected to the Moynihan Train Hall transit hub and Penn Station. Its footprint at 345 Park spans about 497,000 square feet, according to CoStar data.

The NFL is also based at 345 Park, with a footprint measuring nearly 177,000 square feet.

In another validation for Park Avenue and the Plaza District, the largest U.S. office cluster, billionaire investor Ken Griffin, founder of hedge fund Citadel, is moving forward with a plan to build a 1.8 million-square-foot office tower a few steps away at 350 Park Ave. with Rudin and developer Vornado Realty Trust.

“There will always be Park Avenue,” even as an increasing array of occupiers in Manhattan is “tilting to the south and to the west,” Steven Roth, Vornado chairman and chief executive, said in his closely followed annual shareholders letter in April.

He said at the time that Park Avenue had an office vacancy rate of under 7%, with rents ranging from the mid-$80s to $120s. In contrast, New York’s office vacancy has reached what CoStar data shows as a record high of more than 14%.

JPMorgan Chase also is building its 1,388-foot, 60-story global headquarters at 270 Park Ave. while developer RXR plans to co-develop 175 Park Ave., a project billed as a nearly 1,600-foot-tall tower with the highest occupied office floor and the highest hotel in the Western Hemisphere.

A number of addresses in the Park Avenue market commanded top-dollar rents last year as $100-plus-per-square-foot leases hit a record high, a JLL study found. For instance, One Vanderbilt, owned by Manhattan’s largest office landlord, SL Green Realty, scored the highest rent last year with a $247 per-square-foot lease, according to the brokerage.