Brooklyn Retail Remains Resilient, Thanks to Smaller Retailers, Report Finds

Despite supply fluctuations, operational challenges for retailers, new storefronts being built and a rise in chains filing for bankruptcies, the retail landscape across Brooklyn is showing resilience, strength and consistency, in some areas more than others, largely thanks to smaller restaurant and fashion tenants.

A report on Brooklyn retail from the Real Estate Board of New York (REBNY) shared exclusively with Commercial Observer found that the supply for larger retail spaces has been tightening, while leasing for smaller spaces among the fashion and food and beverage sectors have been strong. 

“The perspective that we’re hearing from brokers is that smaller leases are very active,” said Keith DeCoster, vice president of market data and policy at REBNY. “Availability of smaller storefronts — coffee shops [and] smaller boutiques — that remains very active.”

About 80 percent of the available spaces across 17 of Brooklyn’s major retail corridors cover 2,500 square feet or less, according to the REBNY report, which analyzed rent and leasing trends in neighborhoods including Park Slope, Cobble Hill, Bay Ridge, Greenpoint and Brooklyn Heights. Retailers that take up larger spaces — such as gyms, health care, educational facilities, grocery stores — have fewer options unless they move to areas that are less populated and farther away from key mass transit options. 

“The demand is still strong for larger storefronts,” DeCoster said, “But in some of these neighborhoods that supply is drying up.”

That shrinking supply for large storefronts has to do with a decline in new developments, DeCoster noted. 

“If you look at some of the different neighborhoods, like Williamsburg and Greenpoint, a good portion of the larger storefronts — 7,000 square feet plus — came through new developments,” he said. “That pipeline has started to decelerate in the last year or so, and some of those new building storefronts have been leased up. So, that’s why there’s been a little bit of a moderation, particularly in North Brooklyn.”    

However, the overall picture of the Brooklyn retail market is a healthy one, especially in areas where there has been a growth in housing. Brooklyn has been responsible for 35 percent of  the multifamily units completed in the city over the last five years, according to the REBNY data. REBNY also noted that the population in Downtown Brooklyn grew by 16 percent between 2018 and 2022. 

“Brooklyn was the top borough in terms of new housing development going back to 2017 and  2018,” DeCoster said. “But across the region, it started to decelerate with the expiration of the 421a [tax incentive] in 2022. There’s been some new incentives that were recently passed through the City of Yes and other initiatives, but time will tell.”

New residential developments provide more opportunities for a variety of retailers, as does the continuing trend of lower-than-average asking rents. 

Average asking rents remain below pre-pandemic levels, but they’re still doing better compared to last year in 12 of the 17 retail corridors, including Williamsburg, Dumbo and Park Slope, seeing a year-over-year increase. The price per square foot for retail space ranges between $300 and $400, according to DeCoster, while other areas are seeing rents below $200 per square foot.

“The biggest takeaway is that Brooklyn’s retail market is very healthy,” DeCoster said. “But we should monitor housing developments [and] multifamily developments, [because] if it continues to decelerate, it will curb the ability of essential, distinctive retailers to grow in Brooklyn.”

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.