Four Reasons You Can’t Stop the Brooklyn Juggernaut
It’s amazing how much a borough can change in a decade—no longer is Brooklyn a submarket of Downtown, but it's its own thriving market with the sixth-largest office inventory in the US. Brooklyn experts weighed in with the reasons it won’t stop during CBRE’s Q3 overview at DUMBO Heights yesterday.
Four trends will cement Brooklyn’s dominance, according to CBRE SVP Keith Caggiano (right, with CBRE Retail SVP Lon Rubackin): the continued expansion of Brooklyn-born tenants; Manhattan companies relocating entire operations to the borough; big names like Time Inc moving significant chunks of business over the bridge; and more outside companies looking to launch NYC-based operations here instead of Manhattan. Lon, a lifelong Brooklynite, noted the stark difference. “It was very uncool to grow up here. If I told a girl from Manhattan I lived in Brooklyn, I’d have no shot.” He hopes the activity we’ve seen along the waterfront in places like DUMBO, Sunset Park, Williamsburg and the Brooklyn Navy Yard will spread and lift the entire borough.
CBRE sales director Travis Yuengst highlighted the biggest leasing transactions of Q3, which included Time’s nearly 53k SF relocation to Industry City from 1271 Avenue of the Americas, WeWork’s 222k SF deal for incubator space at Dock 72, MakerBot’s 170k SF expansion at Industry City, and Koppers Chocolate's 50k SF relocation to 850 Third Ave from Manhattan’s 39 Clarkson St. In fact, seven of the top 10 deals were signed at Industry City, the 6M SF Sunset Park behemoth that’s targeting the innovation economy and is owned by Belvedere Capital, Jamestown and Angelo Gordon. “Executives are choosing Industry City for its collaborative environment,” he says.
It’s estimated that 60% of NYC’s creative talent lives in Brooklyn, according to LIVWRK CEO Asher Abehsera, whose firm—along with Kushner Cos, RFR Realty and Invesco—transformed the former Watchtower complex into the 1.2M SF DUMBO Heights creative/tech campus. (The overview was held at the property’s 55 Prospect St, which recently lured design firm Frog, represented by Keith, from Manhattan’s Hudson Square.) Asher notes that workers are looking for an experience and robust lifestyle that includes retail, and Etsy (which took 225k SF at the complex) said it best: It wanted to be the un-Google (i.e. not having the large in-house cafeteria) and interact with the community. Eateries DUMBO Heights will bring to the neighborhood include Bluestone Lane, Untamed Sandwiches and Dig Inn.
Can we still say that Brooklyn is “the next Midtown South”? CBRE EVP Sacha Zarba (left, with SVP Freddie Fackelmayer) notes that the Brooklyn name has its own staying power and that companies want to be here for that brand association. (We’ll hear more from Sacha during Bisnow’s 4th Annual State of Brooklyn event at One Hanson Place on Nov. 4.) It’s also fairly evident that Midtown South is running out of options and Brooklyn is the natural progression, adds Freddie, who negotiated the Etsy deal. There’s the additional benefit of REAP, which was extended through June 30, 2017. It offers an annual credit of $3k for 12 years per eligible employee and is open to businesses relocating from outside Brooklyn—an even sweeter deal when you consider the densification trend.
Kushner VP of leasing Dan Bodner gets into the spirit of the quickly approaching Back to the Future Day by taking a spin around the raw space on an IO HAWK personal motorized transporter (which gives us hope that BTTF’s predicted hover boards are just around the corner). He then took us on a tour of the complex, including Esty’s build-out, and tells us that DUMBO Heights is nearly 60% leased.
Out on the complex’s 7k SF roof deck, we snapped CBRE’s Alice Fair and Liz Lash among spectacular views of the Manhattan Bridge and Midtown.