Behind the Scenes: Brooklyn's First New Office Development Since 2004
This week, Downtown Brooklyn’s first ground-up office project since the area’s 2004 rezoning was announced for 420 Albee Square. It’s being developed by JEMB Realty. CPEX managing partner Tim King says it’s like the rezoning coming full circle.
In March 2014, Tim brokered the sale of the biggest piece of land for the site with CPEX managing director Sean Kelly and JEMB’s Bobby Dweck. He says back when the rezoning was being conceived in the early 2000s, the point was to make NYC’s office market more competitive with places like NJ, Westchester and Connecticut. The thinking then was to allow more density, and it was assumed that office buildings would fill it up. Pictured: CPEX managing partner Brian Leary, Bobby, Sean and Tim.
Anyone who’s looked at the area’s skyline in the last couple of years knows that’s not really how things turned out. The main reason there’s been so much residential going up, Tim says, is that the rezoning didn’t stipulate that developers had to build office. So with office rents in the area scarcely breaking the low $40s/SF until recently and big residential demand all over Brooklyn, residential’s made more sense than office for developers there. But Tim says that may not be the situation for much longer. Case in point: 420 Albee Square was initially a multifamily project, and it was only made public Monday that it would be office. It’s not hard to see why when you crunch the numbers: JLL’s Q3 Brooklyn office report puts vacancy at under 3% in Downtown Brooklyn—basically zero. Details on an anchor tenant for 420 Albee Square aren’t out, but Tim tells us we should expect TAMI tenants of one stripe or another.
It won’t be a run-of-the-mill office building, Tim says. A 40k SF grade-level park will front the building when it’s done, as well as a multi-level retail component on the lower floors and a 700-car parking garage under the park. Tim points out that the location, just across from City Point, could interest some impressive retail tenants. He tells us the land sale that made the building possible wasn’t an easy one, and credits Bobby with working an ingenious strategy to buy smaller properties that form the back part of the site, and helping to negotiate the sale of air rights that had been owned by the city, along with the buyout of a commercial tenant.
JLL SVP Michael Berg says over the last 12 to 18 months, what’s stood out in Brooklyn’s office market isn’t so much the tenants streaming over the bridge to fill space, but that established, institutional investors like Tishman Speyer, Boston Properties and Rudin Management are taking a cue from Field of Dreams: If you it build it, they will come. Michael says the ability to see and walk through physical space will be a game changer as newly renovated office projects in Brooklyn like Tishman’s Macy’s redevelopment at 422 Fulton St, just down the street from 420 Albee Square, start to open up for walk-through’s and tenants start to see the transformation across the market.