The owner of the Empire State Building, which primarily owns Manhattan office buildings, is making a nearly $200M bet on Williamsburg's retail scene.

Empire State Realty Trust has entered into agreements to acquire several retail properties on North Sixth Street in the trendy Brooklyn neighborhood for a total of $195M, according to ESRT’s second-quarter earnings report released Wednesday. The company didn't disclose the locations of the properties, as the deals have yet to close.

The acquisitions are broken into two deals. ESRT has agreed to buy five storefronts spanning about 40K SF for $103M. Those buildings are 86% leased for a weighted average lease term of 7.5 years, according to the release.

The other deal is for $92M, but ESRT provided no further details.

The moves continue the REIT’s foray into Williamsburg, which began in September. It then acquired two adjacent properties at the northeast corner of North Sixth Street and Wythe Avenue for $26.4M. The buildings comprise 5,600 SF of retail space and six residential units.

In a statement issued at the time, ESRT CEO Anthony Malkin said that the acquisition was part of a plan to “add well-located NYC assets and recycle out of select non-core assets through 1031 exchanges.” The landlord has sold off or relinquished to lenders office buildings in Westchester County and Connecticut in recent years.

Williamsburg has long garnered interest from young professionals, which has only increased since the 2005 rezoning of a 175-block area of the neighborhood and nearby Greenpoint. As a result, the population has grown by 28%, from 146,000 in 2010 to 187,000 in 2022, according to Furman Center data.

With the changing population, household income has also grown. In 2022, 34.5% of households, the largest share, earned between $100K and $250K. In 2000, the household income group with the largest share, 22.7%, earned less than $20K, according to the Furman Center.

The neighborhood’s new wealth and popularity have attracted retailers, many of which cater to shoppers seeking luxury. The North Sixth Street section of Williamsburg has an average asking rent of $275 per SF, according to Real Estate Board of New York data provided to Bisnow in February. That is up 33% year-over-year and higher than the 2016 peak of $259 per SF.

ESRT’s portfolio consists largely of office space, with 7.9M rentable SF. It also has 727 residential units, 625 of which were acquired via two multifamily assets in 2021. And in 2022, Malkin said that he planned to continue the diversification.

However, the REIT’s net income dropped this quarter to $28.6M from $37M during the same period last year, according to its earnings report. Its funds from operations per share, a figure used by REITs to define cash flow, dipped from 26 cents to 24 cents.