Brooklyn sees commercial real estate boom

January 18, 2022 Beth McCandry

industrial city. Photo: Paul Frangipane/Brooklyn Eagle

Brooklyn is experiencing an office space boom, according to the latest quarterly report from a leading commercial real estate broker, professional services and investment management firm.

Colliers International’s latest quarterly report for the Brooklyn market states that the borough’s (0.47 million square foot) leasing activity has more than tripled quarter-on-quarter since the third quarter of 2021 and is at the level of the 0, reported in the fourth quarter. 46 million lay by 2020.

Notable leases signed in the fourth quarter include Prose (a beauty products 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 lease volume was still 15.7 percent below 2020 levels possibly due to COVID.

The Navy Yard leased the district with a demand of 0.22 million square feet. However, for the second year in a row, Downtown Brooklyn/MetroTech led the district with total annual rental volume of 0.40 million square feet, the report said.

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

Additionally, since September 2021, the district’s median asking rent increased 1.6 percent to $49.14 per square foot, 2.6 percent above the average of $47.88 per square foot a year ago and 2.4 percent above the median asking rent from $48 per square foot COVID-19 pandemic began in March 2020.

The increase since the third quarter of 2021 is mainly due to higher new prices in several blocks of space in 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. You 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;
industrial city.

All in all, Dock 72 (at the Navy Yard), 1 Willoughby Square, 25 Kent Ave., 209 Havemeyer St. and 532 Fulton St., according to a company spokesman.

While downtown Brooklyn-MetroTech continues to be Brooklyn’s largest submarket, “Brooklyn has expanded greatly over the years to include all seven submarkets with diverse tenant verticals (technology, fashion, financial services, government, education, nonprofits, consumer products, etc.),” the spokesperson said.

Buildings in the Industry City, DUMBO and Williamsburg submarkets featured in the report include Industry City itself (with a significant office component), 45 Main Street, 55 Water Street, 20 Jay Street, 25 Kent Avenue and the Panorama complex at 25 Columbia Heights.

Notable buildings in the East 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 spokesman said.

Breakdown between class A and class B office buildings, Class A asking rents increased — for the second straight quarter — by 1.4 percent since September 2021 to an average of $58.72 per square foot. Meanwhile, the average Class B asking rent rose 0.7 percent to $35.54 per square foot, while the average Class C rose 2.2 percent to $34.24 per square foot.

The differences between the different classes of office buildings are “oOften related to a mix of quality, age, ownership, location, amenities, tenant list, pricing, etc. in the building. A is the highest, B is in between and C is the lowest in the rankings.