32 Old Slip is sold for $870m.

The Paramount Group has sold the downtown office tower, Financial Square, to Beacon Capital Partners for over $870 million, more per square foot than the record setting price Paramount paid in May to buy 60 Wall Street. CB Richard Ellis investment sales brokers Darcy Stacom and Bill Shanahan handled the sale. Financial Square, also known as 32 Old Slip for its east side waterfront location, is considered one of downtown's premium office towers and is among the few that can command rents in the $50s per s/f and above.

The sale comes at a time when the office market in Lower Manhattan has tightened dramatically and shows signs of continued improvement. Rents have risen to an average of $44.48 and vacancy has shrunk to 6.7% from the double-digit figures just over a year ago, according to data released yesterday by the real estate services firm Cushman & Wakefield.

The online commercial office space database, Mr.OfficeSpace.com, listed at least 130,000 s/f of vacancy in the building, meaning the 1.1 million s/f building has a significant portion of available space in which Beacon Capital Partners can capitalize on the district's growing rates.

Among the open floors in the building are the three highest, 34, 35, 36, a section that could command premium rates. The entire 30th floor is also available.

According to a top downtown broker, who wouldn't speak on the record because the Financial Square's sale had not yet been officially announced, the building is especially popular among insurance firms who have a preference for the downtown's east side.

Financial Square, which counts the insurance firm Frank Crystal & Co. among its tenants, is as far east as a building can get in the area, a location that's also removed from downtown's PATH terminal and subway lines.

"It's the kind of building that tenants either love or aren't crazy about," the broker said. "If you're coming to work by ferry or you're taking a town car then it's a bit of a slog from the PATH."

Beacon Capital Partners purchased the building, according to sources familiar with the deal, for roughly $800 per s/f, more than the $750 per s/f rate Paramount paid for 60 Wall Street. 60 Wall Street's $1.2 billion price amounted to more in total because the building is much larger than Financial Square, about 1.6 million s/f.

Real estate experts say that the record prices that investors are beginning to pay for downtown assets reflects the expectation that the area's office market will continue to strengthen as more tenants migrate there to escape record rents in midtown, which average around $70 per s/f.

"Investors are starting to wake up about downtown is a valuable place to make investments," said Kent Swig, a prominent owner of commercial estate in Lower Manhattan.

"Rents are still way below midtown and well below what they are going to be. If transportation infrastructure is an issue and an important commodity, then downtown is going to look even more attractive because it has more transportation than any area in the country."