Brooklyn retail rents are “starting to flatten”: REBNY

Retail rents in Brooklyn are dropping throughout a majority of the borough’s prime neighborhoods, according to the latest report from the Real Estate Board of New York.

REBNY analyzed 17 corridors in the borough in its biannual Brooklyn Retail Report and found that average asking rents for ground floor retail had decreased year-over-year in 10 of them and increased in only five of them.

Overall, more established areas in Brooklyn have been seeing rents soften, while rents in up-and-coming areas have been increasing with the arrival of additional new residential and commercial developments, according to REBNY.

The report from winter 2019 was a much more definitive downward trend than the prior REBNY report from summer 2018, when rents went up in seven corridors and down in eight.

“Brooklyn has been experiencing a correction in retail rents since they plateaued in early 2016 to early 2018,” LEVITAN’s Peter Levitan said in a statement. “They are now starting to flatten.”

Levitan added that deal volumes have been increasing over the past two quarters as rents have adjusted to tenants’ expectations

Rents remained flat in one corridor (Fifth Avenue between Union Street and Ninth Street in Park Slope), and data prior to winter 2019 was not available for another (Court Street between Atlantic Avenue and Pierrepont Street in Downtown Brooklyn).

The corridor that saw the largest year-over-year decrease was Montague Street between Hicks Street and Cadman Plaza in Brooklyn Heights, where rents fell by 50 percent from $145 to $72 per square foot.

Compass’ Curtis Woodside, a member of the advisory group that worked on the report, said Montague Street now seems “quiet” and “quaint” compared to other newly vibrant Brooklyn neighborhoods.

“Current availabilities along the corridor mainly consist of older listings that had been temporarily rendered undesirable due to the amount of new construction, with premium retail already leased,” he said in a statement published along with the report.

Both corridors that REBNY analyzed in Cobble Hill saw big decreases as well. Average rents on Court Street between Atlantic Avenue and Carroll Street fell by 28 percent from $134 to $96 per square foot, while average rents on Smith Street between Atlantic Avenue and Carroll Street fell by 34 percent from $101 to $83 per square foot.

And rents were down in four of the five corridors in Williamsburg ranging between 1 and 17 percent. The sole exception in the neighborhood was North 4th Street between Driggs Avenue and Kent Avenue, where asks shot up by 61 percent from $122 to $196 per square foot. This was the sharpest increase throughout the corridors REBNY analyzed.

Both corridors in Greenpoint also saw rent increases, as did Flatbush Avenue between Fifth Avenue and Grand Army Plaza in Prospect Heights and Seventh Avenue in Park Slope between Union Street and Ninth Street. REBNY attributed the Greenpoint increases to more foot traffic from new residential developments along the waterfront and more willingness from owners to build out retail space and provide tenants with long-term leases.