Bisnow's First Brooklyn Special Edition
Brooklyn is NYC's hottest borough, and developers, investors, and tenants of all stripes want to be here. (Now we just need some zebras at the Prospect Park Zoo.) That's why we're thrilled to launch our special Brooklyn newsletter, which'll run every other Thursday. Three signs everyone is flocking to BK:
1) Office just started to make sense.
The public has been crying out for more Brooklyn office space, and market conditions now make office a better development bet than resi, at least in the very best locations, says Meridian Capital Group’s Tal Bar-Or (snapped yesterday). Midtown Equities, Rockwood Capital, and HK Org are gunning for $90/SF office rents (on the top floors) at Dumbo’s Empire Stores redevelopment, while LIVWRK, RFR, Kushner, and Invesco are asking $65/SF and up at Dumbo's Watchtower, where Etsy is likely to sign on as anchor. That’s equal to the peak of what resi rents go for, Tal says, and landlords can get more leaseable space out of an office building than resi.
Tech companies, developers, and equity capital are interested in creating an office market beyond MetroTech, Tal says, but construction lenders are seeking well-capitalized, proven developers while tech spaces often are better left to newer, creative developers. So Meridian predicts more JVs between entrepreneurial developers and institutional partners. Meridian has negotiated some big office financings lately. Most recently: Tal and Ronnie Levine negotiated a $20.5M bridge loan from a regional balance-sheet lender for Treeline Cos’ redevelopment of Downtown Brooklyn's 83k SF 189 Montague. And in Q1, Rael Gervis arranged a $142M CMBS loan for RXR’s acquisition of the 686k SF 470 Vanderbilt (above) in Fort Greene. This morning, RXR's Bill Elder told us there's tons of interest for the 30% of space that has become available since its redevelopment.
2) Retail is hoppin’ like Showtime on the L train.
Retail is going vertical in Williamsburg, thanks to a lack of large spaces and the rent relief tenants gain from leasing second and third floors, says Lee & Associates NYC’s Peter Levitan (right), whom we snapped with L&A NYC president Jim Wacht at this week’s REBNY retail awards at Club 101. Peter, Garry Steinberg, Peter Braus, and JP Sutro are marketing 92 N 6th St, 110 N 6th, 112 N 6th, and 132 Bedford—each of them 9,000 to 12k SF and two or three floors. Peter tells us both boutiques and single-tenant flagships are taking tours. The only retailers that have gone multi-level in Billyburg so far are Whole Foods, Duane Reade, and Urban Outfitters. (As the heights climb, may we suggest a boutique oxygen tank dealer?)
Peter and his team (Garry and Jamie Schultz) have 17 listings in Williamsburg, including the 14k SF of retail in the recently announced pod hotel going up at 626 Driggs (rendered above). It’ll be part of the newly commercialized Driggs Avenue corridor, home to one of the neighborhood's only two L Train entrances. Property owners there have begun to realize the value of their ground floors, he says. Next to the pod hotel, L&A has placed Parm, Umami Burger, and Sweetgreen in the North 4th Street portion of the 247 Bedford project across from Whole Foods, NY Sports Club, Joe Fresh, and WeWork
National retailers are trying new formats in Williamsburg, too, Peter tells us, such as Gant Rugger’s coffee bar inside a store at North 6th and Berry. (Next up, Starbucks is expected to open a Starbucks inside a Starbucks.) Urban Outfitters’ Space Ninety 8 (North 6th between Berry and Wythe) includes local designers’ wares on the first floor and LA bar-and-restaurant concept The Gorbals on the rooftop, plus art exhibits and events.
3) Condos are coming.
You may need a reservation for brunch in Park Slope nowadays, but there are still development opportunities to be unearthed. Sterling Equities’ Greg Katz (whom we snapped this week in his company’s new Time & Life Building office) tells us his company is building 32 condo units as large as 2,899 SF at 345 Carroll St between Bond and Hoyt, near the Smith and Court retail and restaurant corridors. The company is catering to the underserved families in need of three or four bedrooms, for which the typical Brooklyn option is a staircase-laden townhouse.
The units may be big like in Manhattan, but the building will offer Brooklyn-esque amenities: 26 parking spots, a doorman (OK, that one’s Manhattan-esque), a playroom, a gym, bike storage, a dog-washing station, a vegetable garden, a bocce court, and a roof deck with for-sale cabanas. Half the units have outdoor space. Sales will start this month, at $1.5M, the building will come out of the ground next month, and occupancy will begin late next year.
Sterling Equities is shopping for investment opportunities again using its balance sheet or going in with institutional partners, Greg tells us. It’s veering away from the fund kick it had been on since the early ’90s and refocusing on Manhattan, Brooklyn, and Queens after a period investing nationwide. The company closed last month on the $36M acquisition of the 49-unit 80 Meserole apartments (above). Greg says it's new construction, so the plan is to sit back and benefit from Williamsburg’s rent growth. It's also near closing on a Long Island City apartment development site.