By now the saga of Harry Macklowe’s recent misfortunes in New York real estate is pretty widely known. But the latest wrinkle in his attempts to pay back creditors is probably the most interesting — the pending sale of the venerable General Motors Building, known in local circles as the “White House”, at the corner of 59th Street and Fifth Avenue.

Macklowe purchased the building from Conseco for $1.4 billion in 2003, and is looking for a cool $3.5 billion now. On a historical note, almost exactly 10 years ago, in 1998, Conseco and Donald Trump bought the building for $800 million, or $500 per sq. ft., then the highest price-per-foot paid for an office building in America. The current record is held by 666 Fifth Avenue, which sold to Tishman Speyer in 2006 for $1.8 billion.

The latest valuation speaks volumes about how pricey New York real estate has become. But it also comes at a critical juncture in the future direction of the nation’s office market in general. According to just-released research by New York-based Real Capital Analytics, office property sales in January 2008 plummeted 80% from a year ago, totaling just $4.3 billion compared with $20.1 billion last January.

No wonder Robert White, Real Capital president and founder, sees the pending sale as potential good news. “Although it’s pricey, in fact a likely record, it may help restore some confidence to the market,” says White.

Though G.M. has occupied the building for some 40 years, it currently leases only three floors and is moving out next summer for 135,000 sq. ft. in the Citigroup Center on East 53rd Street. Along with its signature tenant’s departure, the building’s naming rights expire in 2010, and any buyer would be entitled to license the naming rights for potentially a pretty penny, maybe tens of millions of dollars.

The CB Richard Ellis sales brokerage team of Darcy Stacom and Bill Shanahan have the listing. If those names sound familiar, they should. The team negotiated the largest deal of 2006, the sale of Stuyvesant Town and Peter Cooper Village to Tishman Speyer for $5.4 billion.

Even given today’s tight credit environment, there is no shortage of foreign investors willing and able to take on such a large prize. Over the weekend, several media reports surfaced linking the sale to Miami-based investor Joseph Cayre and Middle Eastern investors ready to ride to Macklowe’s rescue. Cayre is said to be one of several bidders on the property, including Larry Silverstein.

By any stretch, a more than $3 billion deal for the trophy G.M. Building does not easily pencil out, but then with properties like this, economics often are considered secondary factors to owning a landmark building.

Message boards have wildly speculated about the pending sale. One thoughtful online pundit put it this way: “Well for 3 bil - @ $1578 per sq ft – that gives you approx 2 mil sq ft of rsf @ $60 a sq ft for rent that gives you cash flow of $114 mill + and a cap rate of around 3.8% - which isn’t tremendous right now – but it is the GM building and its in NYC so all I can say is LOCATION LOCATION LOCATION !!!!!”

Stay tuned for more as this story develops.