The next untapped market — Brooklyn’s upper floors

As market heats up, under-used spaces seem more attractive

New York /
Aug.August 17, 2015 09:07 AM

In a market this hot, even less-flashy properties are starting to look good.

Brooklyn prices have climbed so high that previously marginal inventory, such as unused office space above retail locations, is increasingly seen as worth the cost and effort to renovate and market.

The bellwether for the shift was Tishman Speyer’s decision last week to spend $270 million — $170 million immediately, with another $100 million pledged to renovation — on the top five floors of Macy’s nine-story store at the Fulton Mall in Downtown Brooklyn. Tishman also bought air rights to the space above the building, as well as a garage across the street. The company plans to fill the upper floors with office space.

There are 250,000 square feet of vacant space on the upper floors of buildings at the Fulton Mall, according to the Wall Street Journal. Often these spaces attracted significantly lower prices than the retail spaces below, and so were not worth the expense of maintaining.

Now, with startups and high tech firms knocking at the door, the market for smaller, quirkier office spaces has picked up. The vacancy rate for offices in Downtown Brooklyn stands at only 3 percent, according to Downtown Brooklyn Partnership.

But the picture’s not entirely rosy. Many of the spaces are in disrepair, and would require extensive investments to refurbish. And, retail remains high, ranging from $250 to $350 per square foot. Creating new entrances and other upgrades could well cut in to the retail space’s value. [WSJ] Ariel Stulberg


Related Articles

arrow_forward_ios
30 Front Street and 593 11th Street (StreetEasy, Google Maps)
In election week, Olympia Dumbo emerges as winner
In election week, Olympia Dumbo emerges as winner
Pink Stone's Richard Ohebshalom with 180 Nassau Street (Rich Ohebshalom, Google Maps, Getty)
Pink Stone faces foreclosure on DoBro rental building
Pink Stone faces foreclosure on DoBro rental building
Eli Karp, Abraham Leifer, 291 Livingston Street (Linkedin, Getty, Gene Kaufman Architects)
Abraham Leifer faces foreclosure on Downtown Brooklyn hotel
Abraham Leifer faces foreclosure on Downtown Brooklyn hotel
NYU president Andrew Hamilton and 3 Metrotech Center (NYU, JLL)
NYU buys MetroTech Center office building for $122M
NYU buys MetroTech Center office building for $122M
15 Hanover Place in Downtown Brooklyn (Lonicera Partners, Getty)
Lonicera scores $134M loan for DoBro tower
Lonicera scores $134M loan for DoBro tower
KKR's Henry Kravis and George Roberts with 80 DeKalb Avenue (KKR, Google Maps)
KKR, Dalan buy Downtown Brooklyn rental tower from Brookfield for $190M
KKR, Dalan buy Downtown Brooklyn rental tower from Brookfield for $190M
Ohana's Franco Famularo with The Tillary Hotel (Ohana Real Estate Investors, Google Maps)
Fight over Isaac Hager’s Tillary Hotel getting ugly
Fight over Isaac Hager’s Tillary Hotel getting ugly
From left: 11 Hoyt Street and 370 Eighth Street
See clear across Brooklyn, unclothed: Buyer claims $5M penthouse
See clear across Brooklyn, unclothed: Buyer claims $5M penthouse
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...