Brooklyn’s Office Market Is Mirroring Trends in Manhattan

Whatever happens in Manhattan real estate usually takes a while to reappear in Brooklyn — albeit in a slightly smaller or more affordable form.

Office brokers and owners on the other side of the East River seem to be adapting and scaling the same strategies seen in Manhattan markets such as the Garment District or SoHo, and flipping a hefty amount of space while at it.

Office leasing trends in Brooklyn have one main thing in common with these Manhattan markets: Smaller tenants are filling new developments like crazy, whether it is freshly constructed buildings or one of the borough’s main hubs such as Industry City, the Refinery at Domino, 25 Kent or some sections of Downtown Brooklyn.

There is a big difference, though. While Class A and trophy office space is almost completely spoken for in Manhattan, Brooklyn still has a surplus of compelling and unconventional inventory. Real-time data from CoStar shows an office availability rate of about 14.4 percent.

Also, the Manhattan market continues to thrive primarily on chasing big tenants looking for giant footprints in highly amenitized offices that will woo employees and visitors. That trend never took hold in Brooklyn, which provides more of a homegrown approach to workspaces, however premium.

In all of 2025, the average office lease size in Brooklyn was 2,850 square feet, while Manhattan saw an average of 4,500 square feet, according to CoStar.

There was about 699,000 square feet of Class A office leased in Brooklyn last year, up 22 percent compared to 2024, while 1.4 million square feet of Class B and C space was leased, a decline of 1 percent over the same period, the real estate data firm said.

Manhattan’s leasing numbers for 2025 were considerably larger, of course, with 22.8 million square feet of Class A office leased along with 10.8 million square feet of Class B and C space. Brooklyn has a total office inventory of 64 million square feet of office compared to the 578 million in Manhattan, according to CoStar.

“Brooklyn’s next phase of recovery typically follows a fully functioning Manhattan,” Victor Rodriguez, senior director of analytics at CoStar, said in an email. “It would likely take all parts of Manhattan consistently producing pre-pandemic returns before Brooklyn sees a meaningful acceleration.”

Industry City, for example, has over 6 million square feet of space. That is more than double the amount of space in Manhattan’s most expansive office property, the Google Building at 111 Eighth Avenue. Despite being leased to office, retail and industrial tenants alike, Industry City is nowhere near full capacity. The total square footage of occupied space at Industry City is unclear, but the development was home to 650 individual tenants in the first quarter of 2025, and most of its developed space is taken.

Still, there’s more to it than the empty expanses. Much of Industry City’s unoccupied space has not been fully invested in since its time as a purely industrial complex, and the leasing velocity is high whenever new space does come on the market, said Dan Marks, CEO of brokerage TerraCRG.

“There’s an unlimited demand for small office tenants in the Brooklyn market. It’s unlimited,” Marks said. “If you have a building with 1,000-square-foot units, you’re going to fill that building up. … I would say that the vacancy rate for older buildings with multiple units in it is very low. We look at a lot of converted warehouses throughout the borough for clients, and they are almost all 100 percent occupied. We’re talking buildings that have 50 to 100 tenants in these old converted warehouses, almost all full.”

Much like in Manhattan, Class A in Brooklyn is always the first stop for prospective tenants in up-and-coming neighborhoods. The Brodsky Organization’s office property at 497 President Street in Gowanus, for example, was built during the pandemic and reached full occupancy within a year and a half of opening, with almost all the tenants being principals who live nearby with local employees, according to Marks. 

“[The Brodsky Organization] built it knowing that the small to medium-sized tenants are in demand for stuff like that, and they know that because they own the building behind it that has a lot of small spaces, a lot of small tenants,” Marks added. “It’s an old commercial warehouse, and they were 100 percent full for years.”

Smaller tenants — and footprints — are a feature of Manhattan pockets such as the Garment District and SoHo. Tech tenants are also a feature of these office submarkets, just like in parts of Brooklyn. Such tenants can be a boon to office properties like the ones dotting Brooklyn. 

GFP Real Estate has owned older office stock in these Manhattan areas for decades. A diverse mix of smaller tenants at a single address can be a godsend compared to a single large tenant that might suddenly decide to relocate. 

“In my business, we deal with mainly smaller tenants. We don’t have tenants with 200,000, 300,000 square feet, and the key to success is not having too much debt,” GFP Chairman Jeffrey Gural said. “The debt you have should always have 30-year amortization, not interest only. The only protection you have against rising interest rates is amortization.”

Gural attributed the success of GFP’s “legacy portfolio” in those formerly industrial markets of Manhattan to small-tenant leasing, which has been his family’s bread and butter for the last 60 to 70 years ever since his father started investing in those sections of Manhattan.

“I would say there are similarities and there’s an advantage [to leasing smaller tenants],” Marks said. “Obviously, there’s a higher management burden that comes with taking on multiple tenants, or buildings with multiple tenants. But the reality is it diversifies the risk. You’re not so dependent on that one tenant. … I think for a lot of Brooklyn landlords who have the infrastructure set up to be able to manage lots of tenants, they do extremely well and they’re able to ride out tougher times.”

Newer companies that have moved out of the space in which they incubated form the majority of Industry City’s 650 or so tenants, according to Jeff Fein, senior vice president of leasing for Industry City. 

Brooklyn tenants are also more likely to be more industrial, requiring space for a shop to fabricate goods.

At Industry City, Class A tenants have more options to scale up, whereas in Manhattan the possibilities would be strictly limited.

This flexibility attracts large tenants as well, such as NYU Langone Health, which leases 100,000 square feet at Industry City, and the NBA’s Brooklyn Nets, which has a 90,000-square-foot practice facility and 135,000 square feet of office.

“We kind of have to have large tenants when you’re dealing with a giant swath of real estate,” Fein said. “I think that while we want the large tenants, we want to be a place where people can aspire.”

The developed space in Industry City is 90 percent leased, according to Fein.

The Refinery at Domino is up to 75 percent leased with the expectation that the development will reach full occupancy by the end of 2026, said David Lombino, managing director at owner Two Trees Management. The converted sugar refinery has made headway thanks to an effort to lease smaller spaces on more agreeable terms, such as signing deals with companies without a credit history.

This velocity makes Domino an outlier compared to traditional offices in Brooklyn with large floor plates and more rigid terms and credit requirements, according to Lombino. 

Dropping the credit requirement may seem risky, but Lombino said it keeps Two Trees nimble so it can easily replace tenants that unexpectedly shuffle off its tenant roster.

“At the Refinery we have more than a dozen AI-related firms that have taken space — you see that happening at hot spots in Manhattan as well,” Lombino said. “It’s by design that this is happening. We do a lot of programming for our tenants in Domino. We have a monthly AI demo day that draws hundreds of people to the Refinery. … We’ve cultivated a really cool work environment there that people are gravitating toward.”

Two Trees has made big statements about its velocity at Domino and its buildings in Dumbo, stating at the end of 2025 that 50 percent of all Brooklyn leases were signed at its properties. Its Brooklyn buildings sealed an annual total of over 200,000 square feet in new deals in Dumbo alone, and more than 325,000 square feet across the borough.

While Williamsburg, Dumbo, Gowanus and Sunset Park are benefiting from a Class A wave that isn’t unlike Manhattan (but without the incredibly tight inventory), the traditional office haven of Downtown Brooklyn is also attracting tenants thanks to adjacent residential demand, according to Brad Gerla, an executive vice president at CBRE.

He represents Joseph Dushey’s Jenel Real Estate, which owns 532 Fulton Street where the Arizona College of Nursing recently signed a 40,000-square-foot lease for its first campus in New York City. Gerla also reps Amtrust RE’s 203 Jay Street, which just reached full capacity in the last year.

“A lot of these buildings have been fixed up and are functional. I think the smart landlords fix up the lobby, they give it a funky look, and they seem to be doing well with them,” Gerla said. “I think the floor plates are there, the locations are there. I think landlords can get away with not spending that much. On the other hand, there are some buildings where they’re spending a lot on their conversion.”

Global Holdings Management Group has seen a high level of interest from Brooklyn tech tenants at 25 Kent in the last several months after taking over management of the new development in April 2025, leasing about 100,000 square feet since then, according to Craig Panzirer, the firm’s director of leasing.

“I think what we’re seeing in the market now is these tenants who want flexibility with terms between three and seven years, the ability to grow within a building, they want to be in high-quality buildings with amenities and with an owner that is prepared to do what they have to do, capital wise,” Panzirer said. “We built out about 20,000 square feet of pre-built space. We leased just about half of that immediately, and we will continue to build pre-built space depending on demand, which a lot of owners can’t do because it’s capital intensive, out of pocket.”

The trend of companies migrating from Manhattan to Brooklyn in search of better spaces with lower rents seemed to end in 2024. Many of those companies returned to Manhattan, citing the need for a shorter commute for employees who may not live in Brooklyn, and Manhattan landlords offering deals.

In 2024, Brooklyn’s office leasing was in rough shape. Office leasing in Brooklyn hit a new low with only 122,000 square feet of office space leased, a 48 percent plunge from the previous quarter and 50 percent below the five-year quarterly average, according to a report on the second quarter of 2024 from CBRE.

By comparison, 6.13 million square feet was leased in Manhattan over the same period, 19 percent above the five-year quarterly average of 5.15 million, per CBRE.

CBRE also told Commercial Observer at the time that from 2022 to 2024 there were roughly 14 relocations from Brooklyn to Manhattan totaling 246,000 square feet, while there were 96 Manhattan relocations into Midtown from Midtown South and Lower Manhattan over the same period.

So even Manhattan tenants pushed closer to the core of the central business district.

Mark Hallum can be reached at mhallum@commercialobserver.com.