The demand for high-quality commercial office space remains high in Downtown Brooklyn, even as a torrid residential building boom and cultural revival continue, according to the Q1/Q2 2015 Real Estate Market Report released Thursday by the Downtown Brooklyn Partnership, a not-for-profit development corporation.
With the commercial office vacancy rate at 3.4 percent, New York City’s lowest, the need for more high-quality office space in Downtown Brooklyn is greater than ever, the report said. Much of the 17 million square feet of commercial office space in the district remained occupied over the last two quarters and the limited inventory that became available was quickly absorbed.
“As the Downtown Brooklyn renaissance continues on all fronts, our commercial vacancy rate is at an all-time low and there’s a critical need for office space to meet growing demand,” said Tucker Reed, president of the Downtown Brooklyn Partnership. “It’s essential that we focus on all the elements — commercial, residential, retail and cultural — needed to make Downtown Brooklyn a thriving central business district.
The Downtown Brooklyn Real Estate Market Report — now available fully online — is compiled twice a year using on-the-ground expertise of the Partnership’s real estate experts. The report is available on an annual subscription basis and includes features like an interactive development matrix that allows users to track all planned, in construction and completed projects in Downtown Brooklyn, as well as up-to-date industry metrics specific to Downtown Brooklyn.
The full report is available at https://marketreport.downtownbrooklyn.com.
According to the report, commercial activity in the first two quarters of the year was highlighted by several projects, most notably the planned large-scale commercial conversion of 41 Flatbush Ave. by Quinlan Development LLC and Building Land & Technology into the first large-scale, all-commercial project since 12 MetroTech Center opened in 2005. Other commercial projects, both in Downtown Brooklyn and neighboring areas, will bring much needed commercial office space.
While these projects help meet an important need, the report argues that continued growth of the commercial sector is necessary to spur further mixed-use development in a real estate market that is often geared toward the highest and best use: residential. The report spotlights several incentive programs crucial to attracting and retaining commercial business to help ensure the healthy, diverse growth of the most populous borough’s downtown.
At the same time, residential growth continues at a staggering pace and new projects also incorporate retail growth. Over the last two quarters, six new residential projects started construction, which will add 1,052 units to the 5,300 already in construction. All said, there are more than 5,900 residential units complete, 5,300 in construction and 8,400 in the pipeline.
Construction of CityPoint, a 1.8 million-square-foot mixed-use residential, retail and office development by Acadia Realty Trust and Washington Square Partners, is well underway, with retailers set to open in the next year. Located on Fulton Street and bounded by Albee Square West, Willoughby Street, Flatbush Avenue Extension and Fleet Street, City Point will be a game-changer for the area, adding 675,000 square feet of new retail and serving as a new hub for commerce.
Finally, the Brooklyn Cultural District continues to flourish, welcoming more than 4.5 million annual patrons. Over 30 years in the making, the area will be home to nine cultural groups, five distinct public spaces, new retailers, the first new commercial office developments in Downtown Brooklyn in over a decade, restaurants, hotels and thousands of new residents, all located between the Barclays Center, Atlantic Terminal and the soon-to-be-redeveloped LIU Paramount Theatre, making it one of the most dynamic attractions in the five boroughs.
All said, nearly $6.4 billion of private sector funds has been invested in Downtown Brooklyn since 2004, with another $4.2 billion in the pipeline.