The companies agreed to pay $1.3 billion for the 600,000-square-foot (55,700-square-meter) building, according to New York-based Crown. The sellers of the tower, located between East 59th and 60th streets, are investors led by Carlyle Group LP.

The purchase is the biggest of a single building in the U.S. since Google Inc.'s $1.8 billion acquisition of 111 Eighth Ave. in late 2010, and on a square-foot basis it exceeds the record of $1,583 a square foot paid for 450 Park Ave. in 2007. The price is largely a reflection of 650 Madison’s roughly 75,000 square feet of retail space in one of Manhattan's prime tourist and office areas, said Howard Michaels, chairman of Carlton Group, a New York-based real estate investment bank.

"You’re not going to find a more savvy group of investors than Highgate and Crown," said Michaels, who represented another of the potential buyers. "This deal just affirms the desirability of the New York office and retail market. I'm sure they've got a plan to maximize the value of the property's retail and office."

The area is known as the Plaza District because of its proximity to the landmark Plaza Hotel, two blocks west of 650 Madison. Some of the world's most expensive retail space is nearby, including Apple Inc.'s outlet at the General Motors Building, which is across the street. The current retail tenant at 650 Madison is a Crate & Barrel housewares store, under a lease that runs until 2019.

'Retail Triangle'

Haim Chera, managing principal of Crown, said 650 Madison isn't comparable to 450 Park because of its location at the center of a "retail triangle" created by Barneys to the north, Bergdorf Goodman to the west and Bloomingdale's flagship Lexington Avenue store to the east. Those stores, plus Apple, combine for about $2 billion of annual sales, he said in a telephone interview.

"We expect to achieve a retail value of close to $1 billion on this asset, giving us a basis of about $300 million in a trophy office building," he said.

The new owners will discuss "reconfiguring" the Crate & Barrel space in an effort to unlock some of the value, he said.

The buyers intend to borrow only about half the purchase price, meaning they intend to have about $650 million of equity in the property, with the rest in a senior mortgage, according to Chera.

Adam Spies and Douglas Harmon, of New York-based Eastdil Secured LLC, were the brokers on the deal.

Carlyle Deal

Carlyle, based in Washington, and a partner paid $680 million for the 27-story building in 2008, according to research firm Real Capital Analytics Inc. The owners finished renovating the building earlier this year, improving the lobby and installing a glass entrance and new elevators. They also completed more than 400,000 square feet of leases.

"This is a great outcome for our investors and validates our opportunistic approach," Robert Stuckey, managing director and head of U.S. real estate at Carlyle, said in a statement.

The sale of 650 Madison marks the second profitable exit of a 2008 investment for Carlyle. The private-equity firm teamed up with Crown in July of that year to buy a controlling stake in the retail portion of 666 Fifth Ave. from Kushner Cos. for $525 million. They introduced new occupants including Japanese clothing retailer Uniqlo, and later sold the asset in a pair of deals for about $1 billion.

Olympic Tower

Crown is among New York’s most active retail-oriented developers. Crown and a partner last year acquired a stake in the Olympic Tower on Fifth Avenue from the Onassis Foundation, a legacy of the Greek billionaire Aristotle Onassis.

In 2010, Crown and Highgate, a real estate firm headed by Mahmood Khimji, together bought Manhattan’s Knickerbocker Hotel along with Ashkenazy Acquisition Corp.

Other bidders for 650 Madison included HFZ Capital Group, a New York-based condominium and hotel developer; Vornado Realty Trust; and a partnership between Brookfield Office Properties Inc. and General Growth Properties Inc., the second-largest U.S. owner of shopping malls, according to two people with knowledge of the sale process.