Mini office space grows in Brooklyn
The Downtown office boom encourages landlords in other parts of the borough to follow suit — on a smaller scale
The Brooklyn neighborhoods outside of the borough’s Downtown business hub are having their own office party.
Many of those neighborhoods are seeing a quiet but significant uptick in small office properties available for rent, as Brooklyn continues to reap the benefits of higher rental rates, new ground-up construction and more conversions.
Local landlords in Marine Park, East Williamsburg and other
neighborhoods have watched in anticipation as firms such as Kushner Companies and Midtown Equities acquire and renovate buildings in Dumbo and lease them at rents ranging from $50 per square foot into the $70s per foot.
Now, these smaller owners are joining the Brooklyn land rush in larger droves. Such landlords added an astounding 110 properties, encompassing more than 1.2 million square feet to the leasing market outside of Downtown Brooklyn over the past year, an analysis by The Real Deal of CoStar Group data showed. (Those properties are either existing, under construction or under renovation.)
Many brokers and owners believe Brooklyn — once the back-office stepchild to Manhattan — has started to mature into its own primary market, driven by the borough’s exploding residential sector.
“Residential growth makes Brooklyn office locations convenient for a growing number of employees,” said Justin Fitzsimmons, an analyst at the New York brokerage GFI Realty Services. “While much of the [redevelopment] activity has been concentrated in North Brooklyn areas, including the Brooklyn Tech Triangle, Williamsburg and Bushwick, we are seeing the same trends, on a smaller scale, in Red Hook, Gowanus and other neighborhoods across the borough.”
The average size of the newly added office properties identified by TRD was just 11,000 square feet. Those buildings include the 56,000-square-foot 456 Johnson Avenue in East Williamsburg, a former paper mill built in 1931 and now undergoing a rehabilitation for office use; the former Eberhard Pencil Factory at 74 Kent Street in Greenpoint, which is being redeveloped with 33,372 square feet of office and retail space; and 1976 Flatbush Avenue in Marine Park, an office and retail building with 3,672 square feet for rent.
New office space is also being added to some of Brooklyn’s residential buildings, such as 515 Avenue I, a six-story, 47-unit co-op building off of Ocean Parkway.
The newly listed office properties do not include the 1.2 million-square-foot manufacturing building at 77 Flushing Avenue, which is now undergoing renovation, and Sunset Park’s Industry City, which is planned to house 6 million square feet of commercial space. Those properties have been listed in CoStar for more than the past 12 months.
The 1.2 million square feet of new office space outside of Downtown Brooklyn represents a roughly 6 percent increase and brings the total square footage to about 21 million. Downtown Brooklyn, by comparison, has a total of about 22 million square feet of office space.
All in all, the addition of smaller office properties reflects not just the desire to lease the space but also a move toward a more standardized office-leasing economy in the borough. Many of these newly added spaces, especially those in residential buildings, may have been known to local brokers, but now their landlords are seeking to cast a wider net, according to industry players.
“In almost every neighborhood in Brooklyn there is a local economy, and whether it be financial services, lawyers, accountants — those markets are growing,” said Brian Leary, managing partner of the Brooklyn-based real estate services firm CPEX Real Estate.