Even with the dark cloud of an L Train shutdown looming overhead, asking rents for retail space in Brooklyn are on the rise, according to a new market report.
The average asking rent for ground-floor retail on Bedford Avenue in Williamsburg, between Grand Avenue and North 12th Street, hit $361 per square foot during the first quarter of 2016 — the highest in the borough and a 3.9 percent increase from last quarter, according to a new report released by the Real Estate Board of New York. REBNY analyzed 15 different corridors in nine different neighborhoods, including Williamsburg, Greenpoint, DUMBO, Brooklyn Heights, Cobble Hill and Prospect Heights. North 6th Street, between Driggs Avenue and Kent Avenue, saw the biggest increase in northern Brooklyn with an asking rent that reached $216 per square foot, a 4.8 percent spike.
“The modest rise in asking rents from last summer to this winter speaks to the sustained strengthening of the retail market in Brooklyn,” John Banks III, president of REBNY, said in a statement. “The retail corridors examined continue to experience heightened activity.”
Montague Street in Brooklyn Heights, between Hicks Street and Cadman Plaza, saw a dramatic 26 percent increase from last quarter, bringing the average asking rent up to $188 per square foot. However, the report indicated that the jump was due to the small sample size available in the area.
During a panel held by REBNY on Thursday, residential developers and brokers sounded off on the potential closure of the L Train, noting that retail would likely be hit the hardest by a shutdown since it could deter customers from traveling to the borough after work or on the weekends. The discussion came on the heels of a recent Wall Street Journal report that claimed MTA officials are also considering shutting down all L train service in Manhattan.
When it comes to living in Brooklyn, however, Jeff Levine, chairman of Douglaston Development, said that he doesn’t buy into the “fear mongering” surrounding the possible shutdown. He said that large developments, like the 40-story rental tower at 2 North 6th Place that his company is building, won’t be affected because a shuttle will transport residents. He conceded that smaller residential developments and those that are further into Brooklyn could be more adversely impacted.
Some of the panelists noted that they didn’t think a full shutdown would actually happen given the potential impact on local businesses.
“I’m not going to start yelling fire just yet,” said Geoff Ross, director of development at Thor. “It’s the MTA. They always seem to have another card up their sleeve.”
The panelists also discussed the need for a replacement to the newly expired 421a tax abatement program and how it will inhibit the creation of new rental housing. Still, when asked if they’re “bullish” or “bearish” on the borough’s market, all six panelists chose the former. After all, they’ve bet on Brooklyn before.
“We bought in Williamsburg when it was literally a wasteland,” Levine said at the start of the panel. “The reality is when we got there, we had to disturb johns and their hookers in cars.”