Brooklyn Office Leasing Declines as Asking Rents Tick Upward
After a slow recovery this year, Brooklyn’s office market struggled in the third quarter, with leasing activity dipping 30 percent, according to Colliers’ latest market report.
The amount of office space leased slid from 380,751 square feet last quarter to 265,132 square feet in the third quarter of 2022. However, tenants have still leased 41 percent more space this year compared to this time last year.
The largest deals closed in Kings County in the third quarter included 72,000 square feet with marketing firm Huge at Dock 72, 27,000 square feet with Highline Commerce in Industry City, and a 19,000-square-foot expansion by the federal General Services Administration at 100 Myrtle Avenue in Downtown Brooklyn.
The average Brooklyn office asking rent rose 3 percent to $52 a square foot compared to last quarter, and it’s up 7 percent, to $48 a square foot, from one year ago.
High-priced new office space hitting the market in Williamsburg, Brooklyn’s priciest office neighborhood, is responsible for the slight uptick in asking rents. Frank Wallach, Colliers’ executive managing director of research, pointed to 400,000 square feet of new space at 300 Kent Avenue, which is part of the redevelopment of the Domino Sugar Factory. The project at 25 Kent Avenue, which has struggled to attract tenants, is another high-end office property in the area with plenty of space on the market.
Wallach noted that Brooklyn’s office market has 41 million square feet of office space compared to Manhattan’s 540 million square feet of office. So a few hundred thousand square feet of space can shift asking rents across the borough one way or the other.
However, Brooklyn’s availability rate has improved during the pandemic, while Manhattan’s has worsened. Kings County had added a lot of new and renovated office space just before the pandemic, and enough of it has been leased that the availability rate has remained steady.
“Manhattan’s overall availability has increased by nearly two-thirds from March 2020,” said Wallach. “It has increased by 64.6 percent. Some back of the napkin math: Manhattan had gone from 50 million square feet of available space to 88.61 million square feet, hence the 64 percent increase in the last two and a half years. While Brooklyn’s total availability decreased by 2 percent.”
Sizable leases with Huge and Food52 at Dock 72 have helped, along with multiple deals at One Willoughby Square in Downtown Brooklyn.
Rebecca Baird-Remba can be reached at email@example.com.