Heritage, Rubenstein Close To Signing Anchor Tenant At 25 Kent
The first ground-up, speculative office building to come to Brooklyn in decades is close to landing its first major tenant.
The builders of 25 Kent said they have a lease out for 100K SF at the 500K SF building. A source told Bisnow a major coworking company will be the anchor tenant, but developers Heritage Equity Partners and Rubenstein Partners declined to provide specifics of the deal.
“It’s going to be an important validation of the commercial market in Brooklyn and the growth opportunity moving forward,” Heritage Equity President Toby Moskovits said in an interview.
The building is due to open in December.
The anchor tenant is expected to take 67K SF on the fourth floor and 30K SF on the fifth floor of the eight-story building. It is also set to take 3K SF of retail on the ground floor, according to Rubenstein Director of Investments Jeff Fronek.
The building features office space on floors three through eight, and in total it has 350K SF of office space, 80K SF of light manufacturing space and 70K SF of retail space. The asking rents range from the high $70s to low $80s. The ceiling heights reach 15 feet and the retail space's ceilings are between 18 and 22 feet.
“We knew this was not a building that you could really pre-lease,” Fronek said, adding that the firms went to over 100 lenders before two would agree to underwrite the debt on the building.
“What everyone is sort of insinuating, is if you’ve delivered, and there hasn’t been a lease then, that means no one wants it,” he said, adding that they have been trading term sheets with several other tenants. “People who say that don’t have the benefit of what we see in real time … It’s a really unique project and will attract really unique tenants.”
Heritage and Rubenstein, which bought a majority stake in the building in 2015, secured a $197M construction loan for 25 Kent from Wells Fargo and Natixis Real Estate Capital in 2016. Global Holdings Group has reportedly made a $100M preferred equity investment in the project.
Following deals like Etsy’s 200K SF lease at Kushner Cos.’ Dumbo Heights complex in 2014 and Bjarke Ingles Group’s 50K SF lease at Two Trees' 45 Main St., many believe Brooklyn is a red-hot office destination. But it is still hard to get major firms across the bridge.
A Newmark Knight Frank team led by David Falk is handing the office leasing at 25 Kent. Lee & Associates is handling the retail portion of the building.
Falk said the attraction for tenants is the large floor plates the building offers at a discount to Manhattan prices.
“What these progressive companies want is a large floor plate,” he said. “Now that it is almost finished, it’s great to be able to tour a building that has these wow factors.”
Moskovits, speaking at Bisnow’s Brooklyn State of the Market Event Thursday, said building 25 Kent speculatively meant taking a lot of risk. But, she said, the building has “defied all odds.”
“Nothing about 25 Kent — nor about the coming commercial renaissance in the borough of Brooklyn — is obvious,” she said. “But in five years from now, when we all look back at innovative companies and leading global technology players that are here in this neighborhood … I hope everyone remembers this moment.”