Office leasing activity up in Brooklyn
Sunset Park, Williamsburg, Downtown see lively activity
Office leasing activity increased more than 10 percent in the second quarter of 2022 compared with the year’s first quarter, according to the new Brooklyn office market report from Collier’s, an international management company that provides services to commercial real estate users, owners, investors and developers.
The report breaks the borough’s office market into seven “submarkets”: Downtown/MetroTech; DUMBO/DUMBO Heights; Eastern Brooklyn; Industry City, Brooklyn Navy Yard; Red Hook/Gowanus; and Greenpoint/Williamsburg.
The largest transactions during the second quarter of 2022, according to the report, included the New York City Department of Finance’s 136,000-sq.-ft. lease renewal at 147 41st St. in Sunset Park; Vice Media’s 78,000-sq.-ft. renewal at 289 Kent Ave. on the Williamsburg waterfront; and Blank Street’s (coffee) 16,000-sq.-ft. new lease at 10 Grand St., also on the Williamsburg waterfront.
Additional notable Brooklyn deals took place at the recently developed 1 Willoughby Square on Duffield Street south of MetroTech, Downtown Brooklyn. Ms. Foundation for Women leased 11,000 square feet in the building, while financial technology company Propel leased 10,000 sq. ft.
Average Asking Rent Increased by 0.8 percent
Brooklyn’s asking rent average increased by 0.8 percent since March 2022 to $50.41 per square foot. This was 5 percent above the $48.03-per-square-foot average one year ago as well as the $48.00-per-square-foot asking rent average at the start of the COVID-19 pandemic in March 2020, according to Colliers.
This increase in pricing since the first quarter was mainly due to a below-average priced sublet block removed from the available office-space inventory at 220 36th St., while above-average priced smaller blocks of space were listed during the quarter at 329 Broadway and 175 Pearl St., the report said.
Class A asking rents decreased by 0.7 percent to an average of $58.97 per square foot. Meanwhile, the Class B asking rent average increased — for the sixth consecutive quarter –by 2.9 percent to $37.21 per square foot. In addition, the Class C average jumped by 25.2 percent to $38.87 per square foot.
Asking Rent Lower in Red Hook, MetroTech, W’burg
The average asking rent was reduced in three of Brooklyn’s seven submarkets during the second quarter. The 5.2 percent drop in Red Hook/Gowanus to $41.33 per square feet –the largest percentage decrease in Brooklyn during the second quarter –was mostly caused by lower-repricing in pockets of the submarket, the report said.
Downtown Brooklyn/ MetroTech’s asking rent average decreased by 1.4 percent to $53.41 per square foot, while Williamsburg/Greenpoint’s average was lower by 0.9 percent to $64.06 per square foot.
Meanwhile, the 8.7 percent gain in Industry City was the sharpest quarterly increase in Brooklyn. However, at 6.5 percent, Red Hook/Gowanus had the strongest growth in pricing since March 2020.
Availability Tightened Since First Quarter
Brooklyn’s office-space availability rate tightened since the prior quarter by 1.5 percentage points to 19.9 percent. This was Brooklyn’s largest quarterly drop in two years due to the removal of the 100,000-plus-square-foot sublet block at 220 36th Street and the block removed from the market at 289 Kent Ave.
Availability tightened or remained stable in all seven of Brooklyn’s submarkets during the second quarter. The 2.8 percentage-point availability rate decrease in the Navy Yard to 25.9 percent was the largest percentage point drop during Q2 2022 due to smaller blocks of office space removed from the available inventory at several of the Navy Yard’s buildings, the report said.
Sublet space represented 8.3 percent of Brooklyn’s overall availability, notably lower than the 9.0 percent share during the first quarter of this year, and significantly less than Manhattan’s 22.1 percent share. However, net sublet availability in Brooklyn increased by 28.9 percent since March 2020. This was also below Manhattan’s 71.9 percent gain.
Office-space absorption in Brooklyn (or the amount of space occupied) during the second quarter was positive at 0.62 million square feet. Furthermore, the positive absorption since March 2020 totaled 0.74 million square feet whereas Manhattan’s net absorption was negative 38.90 million square feet during the same period, the report said.
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