A Building Grows in Brooklyn
Okay, I admit the title is a bit misleading, but hopefully it got your attention. The reality is that no major office building construction is underway in “greater” downtown Brooklyn right now. Residential construction is a completely different story, of course, but I’m not even going there this week.
Newmark Grubb Knight Frank currently tracks 16.6 million square feet of office inventory within 99 Brooklyn buildings, a rather small market, especially when compared to its big brother, Manhattan. But that small market is doing quite well these days, with an availability rate of just 4.1%, down from 6.5% one year ago. Compare that to Midtown South, which at 8.8% is widely believed to have one of the lowest availability rates in the U.S. The tightness of the Brooklyn market is mainly the result of four factors:
- Firms that had considered giving up space have decided to stay put;
- One office building which had availability (625 Fulton Street) is being torn down to make way for a residential tower;
- TAMI tenants are moving in or expanding;
- In case you haven’t heard, Brooklyn is hip these days, and among its many recent transplants from around the world, there are many who prefer launching start-ups or working in traditional companies close to home, to making their fortunes in Manhattan. The myriad shops, bars and restaurants that have opened over the past few years help keep them in their own borough, too.
Even so, despite its low availability rate, Brooklyn still has a couple (and I really mean, just a couple) of 100,000 square-foot plus blocks in the area:
- 55 Water Street (Empire Stores), a building by the waterfront under renovation and due for completion in mid-2015, with 239,000 square feet available; and
- 1 Pierrepont Plaza, near the historic center of Downtown Brooklyn with 219,000 square feet available.
Further afield, there are some quasi-office/industrial buildings along the waterfront that have large blocks of space, but for this week let’s keep close to downtown.
Should we expect more office construction in Brooklyn? Currently, most of the development sites are headed for residential use. But all that’s needed to change course is the right zoning and some number crunching that shows office space could work better for the bottom line. With a 4.1% availability rate and a population that doesn’t necessarily want to cross the East River, that just might happen sooner rather than later.