Downtown, Brooklyn Beneficiaries Of Shift To Quality Office
Strong economic growth and the trend of moving to quality office space drove a surge of increases in New York leasing activity, particularly in downtown Manhattan and Brooklyn, during the first quarter of 2017.
Downtown Manhattan saw a whopping 286% increase in leasing activity in Q1 2017 over Q4 2016 while Brooklyn saw a 48% increase during the same period, according to a new CBRE report.
Of the 1.87M SF in new Downtown leases, the top three deals accounted for more than 60% of total square footage. The Royal Bank of Canada renewed a 400K SF lease at Brookfield Place, Spotify moved to 378K SF at 4 World Trade Center, and the New York State Attorney General's Office moved to 345K SF at Fosun's 28 Liberty.
The fourth-largest downtown lease deal of Q1 2017 was the underreported move of AON Plc taking 203K SF at Brookfield's 1 Liberty Plaza.
In Brooklyn, Q1 leasing activity was 48% higher than the previous quarter. A mix of tenants leased 430K SF in Brooklyn, with 2U Inc. the largest new leaser, taking 80K SF in Dumbo. The Dumbo submarket led Brooklyn submarkets, driven by the new 500K SF Empire Stores development reaching almost 85% occupancy.
Most new leasing in Brooklyn continues to be driven by the sales and repurposing of 37 buildings formerly owned by the Jehovah's Witnesses, who have left their Brooklyn headquarters for upstate New York.
New development in Brooklyn increased by 900K SF, increasing availability to 18.1%. Nine Brooklyn office projects under construction will increase Brooklyn's office availability to 3.8M SF by 2020. Among the new projects will be 88K SF of office space in two buildings across the street from each other in Bedford-Stuyvesant and a new office hub in the borderlands straddling Williamsburg and East Bushwick dubbed Morgantown.
Midtown continued to lead the New York City area in leasing activity, with 3.47M SF of activity in Q1 2017. However, that number represented the least activity for Midtown of the last four quarters. Twenty-First Century Fox led Midtown leasing, taking 784K SF in the News Corp. Building at 1211 Sixth Ave.