Are retail rents going up or down in Brooklyn? Well, it depends on where you are.
A new report from the Real Estate Board of New York analyzed 16 of the borough’s prime retail corridors from the summer and found an almost even split between areas where rents were going up (seven) and areas where rents were going down (eight). Average asking rents for ground floor retail in one corridor — Franklin Street in Greenpoint between Meserole Avenue and Commercial Street — remained unchanged year over year at $74 per square foot.
The rent declines mostly took place in more established neighborhood where rents had skyrocketed following the financial crisis, the report found. In Cobble Hill between Atlantic Avenue and Carroll Street, for instance, it dropped 31 percent to $103 per square foot on Court Street and 32 percent — the sharpest decrease throughout Brooklyn — to $101 per square foot on Smith Street.
Brooklyn Heights saw the same trend, with rents falling 27 percent to $110 per square foot on Montague Street between Hicks Street and Cadman Plaza.
Prospect Heights, on the other hand, saw its average asking rent increase for the third consecutive year, rising 9 percent on Flatbush Avenue between 5th Avenue and Grand Army Plaza to hit $118 per square foot. REBNY attributed the consistent rises to the area’s rising foot traffic, spurred by factors like new residential projects and popular restaurants.
Williamsburg saw mixed results, with increases occurring in three of the five corridors that REBNY surveyed. These included North 6th Street and North 4th Street between Driggs Avenue and Kent Avenue, which saw respective increases of 8 percent and 34 percent to hit $251 and $197 per square foot. The increase on North 4th Street was the largest throughout Brooklyn.
On Bedford Avenue, rents dropped by 11 percent to hit $351 per square foot between Grand Street and North 8th Street, while they increased by 3 percent between North 8th Street and North 12th Street to hit $168 per square foot. Rents there have stayed relatively stable overall despite the upcoming L train shutdown, according to REBNY.
Retail rents are trending downward much more clearly in Manhattan, where average asking prices dropped in 15 of 17 corridors surveyed by REBNY in its fall 2018 retail report for the borough. This was the highest number of corridors in decline since at least 2000, when REBNY started doing its Manhattan retail reports.
The City Council is considering a bill meant to help local retailers in New York called the Small Business Jobs Survival Act that would let commercial retail tenants renew their leases for 10 years as long as they met the terms of their existing contracts. REBNY has come out strongly against the bill, and REBNY President John Banks said in a statement that it would be better for markets to correct any issues of high rents on their own.
“When markets are allowed to correct naturally without overbearing intervention,” he said, “they will be more resilient and adaptable in the long run.”