Brooklyn sees commercial real estate boom

Office leasing activity more than tripled since last quarter

January 18, 2022 Brooklyn Eagle Staff

Industry City. Photo: Paul Frangipane/Brooklyn Eagle

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Brooklyn is currently undergoing an office-space boom, according to the latest quarterly report from a leading commercial real estate brokerage, professional service and investment management company.

The last quarterly report from Colliers International for the Brooklyn market says that the borough’s leasing activity (0.47 million square feet) more than tripled, quarter over quarter, since the third quarter of 2021 and was on par with the 0.46 million reported in the fourth quarter of 2020.

Among the major leases signed during the fourth quarter include Prose (a beauty product company) at 850 Third Ave., the Jewish Child Care Association at 57 Willoughby St. and Friends of Prospect Schools NY at 341 39th St.

Total leasing volume was still 15.7 percent less than the amount for 2020, possibly due to COVID.

The Navy Yard drove the borough in leasing with 0.22 million square feet of demand. However, for the second consecutive year, Downtown Brooklyn/MetroTech led the borough in full-year leasing volume at 0.40 million square feet, the report said.

One Willoughby Square, as seen in August 2021. Wikimedia photo by Griss Jr.

In addition, the borough’s asking rent average increased by 1.6 percent since September 2021 to $49.14 per square foot, 2.6 percent above the $47.88-per-square-foot average one year ago and 2.4 percent above the $48-per square foot asking rent average at the start of the COVID-19 pandemic in March 2020.

The increase since Q3 2021 was mostly due to higher repricing in several blocks of space across DUMBO/DUMBO Heights, the company said.

In general, asking rents were highest in DUMBO/DUMBO Heights, Williamsburg-Greenpoint, and Downtown Brooklyn-MetroTech.

Colliers divides Brooklyn into seven “submarket” areas for office buildings. They are:

Downtown Brooklyn-MetroTech;
DUMBO-DUMBO Heights;
Brooklyn Navy Yard;
Eastern Brooklyn (judging from a map provided by the company, Bed-Stuy, Crown Heights and Bushwick);
Red Hook-Gowanus, and;
Industry City.

All in all, some of the most active Brooklyn office buildings, in terms of real estate activity, during the past two or three years are Dock 72 (at the Navy Yard), 1 Willoughby Square, 25 Kent Ave., 209 Havemeyer St. and 532 Fulton St., according to a company spokesperson.

While Downtown Brooklyn-MetroTech continues to be the largest of the Brooklyn submarkets, “Brooklyn has expanded greatly over the years to include all seven submarkets with various tenant industries (tech, fashion, financial services, government, education, non-profit, consumer goods, etc.),” the spokesperson said.

Among the buildings in the Industry City, DUMBO and Williamsburg submarkets that are represented in the report are Industry City itself (which has a significant office portion), 45 Main Street, 55 Water Street, 20 Jay Street, 25 Kent Avenue and the Panorama complex at 25 Columbia Heights.

Notable buildings in the Eastern Brooklyn submarket include 95 Evergreen Ave. and 455 Jefferson St., while notable Red Hook-Gowanus buildings include 94 9th Street, 160 Van Brunt Street, 68-92 3rd Street and 80 Richards Street, the spokesperson said.

Breaking things down between Class A and Class B office buildings, Class A asking rents increased – for the second consecutive quarter – by 1.4 percent since September 2021 to an average of $58.72 per square foot. Meanwhile, the Class B asking rent average increased by 0.7 percent to $35.54 per square foot, while the Class C average grew by 2.2 percent to $34.24 per square foot.

The differences between the various classes of office buildings are “often related to a mix of quality, age, ownership, location, amenities, tenant roster, pricing, etc., in the building. A is the highest, B is in between and C is the lowest in the rankings,” according to the spokesperson.