Brooklyn retail is starting to close the gap with Manhattan a bit, say brokers, who hope the follow-up effect from the borough’s rise as a hot residential market is sustainable.
While zoning considerations hamper Brooklyn’s retail real estate development, rents are surging, with prime space in busy shopping corridors fetching $120 a square foot a year. And Brooklyn’s become a coveted destination for some retailers, who are pushing their way into the borough.
Retail rents haven’t quite caught up to Manhattan, but they’re mirroring the growth seen in its tonier neighbor, said Faith Hope Consolo, chairwoman of the retail leasing and sales division at Prudential Douglas Elliman.
“Brooklyn, after Manhattan, is the second most important borough in retail,” she said of the 75 square miles and more than three dozen neighborhoods of Kings County. “And Brooklyn is a shopper’s paradise.”
Timothy King, chief operating officer at Massey Knakal Realty, and a Brooklyn specialist, agreed.
“In many cases, rents are rivaling or exceeding Manhattan,” he said. “I hear from people, ‘Hey, you know for that kind of number I could be in Manhattan’. Keep in mind, there are more people that live in Brooklyn than practically anywhere in the country.”
Data collected by Massey Knakal from its Brooklyn brokers last year identified 198 retail districts in Brooklyn, with rents ranging from $20 to more than $120 a square foot.
Two corridors had rents of more than $120 a foot: Montague Street from Court Street to the Promenade in Brooklyn Heights and Fulton Street between Adams Street and Flatbush Avenue in downtown Brooklyn. Other notable districts, with rents ranging from $85 to $119, were Brighton Beach Avenue from Ocean Parkway to Coney Island Avenue in Brighton Beach and 86th Street from Fourth to Fifth avenues in Bay Ridge.
“Eighty-sixth Street in Bay Ridge is probably one of the strongest neighborhoods for retail, and they’re trying to develop more,” Consolo said. “The rent there is about $200 a foot, and it looks like 34th Street in Manhattan. It’s all your chains.”
In a list of average retail rents by neighborhood provided by Prudential Douglas Elliman, whose figures were much higher than Massey Knakal’s, Bay Ridge had the highest rents at $200 a foot. It was followed by Brooklyn Heights at $150 a foot; downtown Brooklyn at $125 a foot; Dumbo at $115 a foot; Williamsburg at $100 to $110 a foot; and, finally, Bensonhurst, Brighton Beach, Court Street, Coney Island, Sheepshead Bay, and Sunset Park, all at $100 a foot.
Those numbers tally up to a borough that is booming in retail, said Consolo, who said she is currently leading the real estate division for the Brooklyn Chamber of Commerce.
“You have a lot of shopping going on in Brooklyn, but there’s a new face, a new level,” she said. “So you’re seeing some of the retailers that are coming to Manhattan that have been inordinately successful. Your Target opened a big store in Brooklyn. You’re going to have Best Buy. I think that Trader Joe’s is looking in Brooklyn. Whole Foods just took a location in downtown Brooklyn.”
“Montague Street is one of the most upscale and expensive, and also one of the most established, retail corridors,” King said. “People came into Brooklyn across the East River, and that’s kind of where they landed. Fulton Street, before there were suburban shopping malls, was the essence of the downtown shopping district.”
But some retail real estate brokers said there could be much more retail development in the borough. Since Forest City Ratner, the developer behind a planned basketball arena and massive redevelopment of the Atlantic Yards area, controls much of the better retail space in the borough, options are limited, brokers said. Still, in a Brooklyn Chamber of Commerce survey conducted recently, 61 percent of 177 Brooklyn businesses that responded said they support the Atlantic Yards project. Only 18 percent were opposed.
Even if that project comes to fruition, it can be difficult to get spaces for big-box retailers developed in the borough — aside from retailers such as home improvement stores like Home Depot and Lowe’s that can open as-of-right in a manufacturing zone.
“The whole borough is under-retailed — certainly as far as the big-box perspective,” said Steve Gillman, a vice president at Northwest Atlantic Partners, a retail brokerage. “And while I know that everybody hates Wal-Mart and Costco and Home Depot and the rest of it, the people who live in the borough actually like to shop in some of those places.”
In the same Brooklyn Chamber of Commerce survey, only 33 percent of the 177 businesses polled said they supported Wal-Mart coming to Brooklyn, while 44 percent said they were opposed. Another 18 percent were neutral, and 5 percent expressed no opinion.
“The city does not do anything to make retail easy in Brooklyn,” said Chase Welles, a senior vice president at Northwest Atlantic Partners, which has brokered deals on behalf of Whole Foods in the city. “There are a lot of areas that could get redeveloped with retail, but the city holds on to their old manufacturing zonings.”
One such area is around the Gowanus Canal, brokers said, where the city may rezone the area north of 3rd Street.
Whole Foods and Home Depot have already put in stores, King said, and “there will be more. Practically everywhere in the borough, the challenge for every retailer and every developer is the same: Finding a large enough site to put up the critical mass that somebody wants to build a shopping center or a strip or whatever else you need. The last few years have seen considerable rezoning, and the past two administrations have been much more amenable to smart growth than the past 50 to 100 years.”
Neighborhoods seeing some development include downtown Brooklyn. Consolo and her team are representing 89,000 square feet of space at 101 Willoughby Street near the MetroTech Center. It includes 14,000 square feet of ground-floor space, a 25,000-square-foot selling concourse, and two other levels of 25,000 square feet that could be used for retail, parking, or remain as office space.
Another space being represented by Consolo at the Brooklyn Renaissance Plaza consists of a 12,000-square-foot retail space on two levels at the base of a new 23-story, 280-room expansion of the Brooklyn Marriott Hotel.
“Downtown Brooklyn has so much untapped retail potential,” Consolo said. “In fact, its pedestrian traffic is equivalent to such established shopping corridors as Broad and Beaver streets in Lower Manhattan, and the Lexington Avenue and 86th Street area.
“Also in downtown Brooklyn, they’re trying to change the face of the Fulton Mall — bring it up a notch,” she added. “It looks like the old 14th Street, and they’re trying to make it look like 34th Street.”
Consolo said her new retail division in Brooklyn will have a dozen new projects in the works by year’s end. That means drawing in retailers such as H & M, Zara, Club Monaco, Gracious Home, and Crate and Barrel. It also means developing new space in Flatbush.
“We’re working on another development that’s not announced yet, but I’m putting it on the table soon,” Consolo said. “It’s a complex near Brooklyn College and Flatbush that will encompass 100,000 feet of retail specifically geared to the student community.”
King pointed out that the area is particularly ripe for development, with three distinct shopping communities: students, residents, and commuters due to the subway terminus.
Brokers said areas like East New York and certain neighborhoods throughout Brooklyn would be good candidates for new retail development. Around King’s Plaza could use more retail development, as well as Coney Island, Gillman said. And while Williamsburg has lively existing retail on Bedford Avenue, the spaces are rather small.
“I love Bedford Avenue,” Gillman said. “I was there the other day looking for a client, but there’s no space of any size. All the stores are the little 20-footers. You want to put in a 3,000-square-foot tenant, whoever it might be — clothing, a haircutter — there’s just no way to do it.”
The jury is still out on neighborhoods like Red Hook and Bushwick, brokers said. Though furniture store Ikea may thrive in out-of-the-way Red Hook, the supermarket Fairway may not be enough of a destination to attract the necessary traffic, Welles said. And, in Bushwick, it may be too early for retailers to take the gamble, Gillman said.
“Bushwick is another neighborhood that could certainly use, not necessarily big boxes, but more good neighborhood retail,” he said. “Short of the dollar stores and the bodegas, there really isn’t much. Bedford-Stuyvesant is better — even East New York has better retail.”
So there’s a neighborhood for every retailer, but the challenge is finding them the right fit, Consolo said. “In Brooklyn, you’re after the same customer as Manhattan, the same dollars, you’re right there,” she said. “But we have to put them in the right neighborhood for their product.”