Brooklyn’s Retail Market Sees Strong Leasing But Lagging Asking Rents: Report
By Rebecca Baird-Remba March 1, 2024 4:40 pm
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Kings County’s retail market had an uneven recovery in the second half of 2023, according to a new report.
The borough saw strong leasing numbers, but asking rents in most areas still lag pre-pandemic levels and storefronts are staying vacant longer, according to the latest Brooklyn retail report from the Real Estate Board of New York.
The report blames staff shortages, a lack of high-quality space, long waits for liquor license approvals, and a pullback from big retailers like banks, pharmacies and medical clinics for Brooklyn’s mixed retail recovery in 2023. It also points out that a surge in retail leasing in 2021 and 2022 now means that those shorter leases are ending, often leaving storefronts vacant.
Notable Brooklyn retail deals from July to December 2023 came from grocery stores, food and beverage purveyors, or private schools. Those include the 33,000-square-foot Lidl supermarket deal at 1730 Bedford Avenue in Crown Heights, Ember Charter Schools taking 25,000 square feet at 295 Front Street in Vinegar Hill, and a lease for Ray’s cocktail bar at 905 Lorimer Street in Greenpoint.
Of the Brooklyn retail corridors that REBNY tracks, only one — North Sixth Street between Driggs and Kent Avenues in North Williamsburg — had notably exceeded its previous peak asking rent of $259 per square foot, which was in 2016. Average asking rents along that stretch of North Sixth hit $275 per square foot in the end of 2023, a 7 percent increase from the first half of the year and a 33 percent year-over-year increase.
Retail rents in the rest of Williamsburg — which REBNY said has plenty of interest from luxury brands — are still high but just not as high as their 2016 peaks. Bedford Avenue from North Eighth to North 12th streets saw average asking rents of $170 per square foot, up from $122 in the first half of 2023 but down 10 percent from a year prior and down 15 percent from a 2016 high of $200. Bedford Avenue from Grand Street to North Eighth Street was also doing well, with average asking rent at $165 per square foot, up 12 percent from both the first half of 2023 and a year ago.
The Dumbo retail corridors of Washington, Main and Water streets have recovered from a 2021 low of $36 per square foot with an average of $67 per square foot. However, that figure was still down by more than half of the 2018 pre-pandemic peak of $143. The waterfront tourist hub also saw the biggest year-over-year asking rent decline of all the tracked retail corridors on a percentage basis, dipping 21 percent from $85 a year ago.
Brooklyn Heights and Downtown Brooklyn also seemed to be doing well. Montague Street from Hicks Street to Cadman Plaza had an average asking rent of $130 per square foot, increasing 24 percent year-over-year. Similarly Fulton Street saw an average asking rent of $245 per square foot, up 20 percent year-over-year. Park Slope reported healthy rents too, with average asking rents of $112 along Seventh Avenue and $111 along Fifth Avenue. Fifth Avenue was even slightly up from its 2019 peak of $104.
Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com
