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April 9, 2008
Downtown Experiences Net Loss in Office Space
Downtown Brooklyn's rezoning was originally promoted to spur construction of new office towers, but there's actually been a net loss in Class B and C office space, as detailed in The Real Deal. Residential conversions at the former Williamsburgh Savings Bank building, now One Hanson Place, and the Verizon building in MetroTech, now BellTel Lofts, together have accounted for a loss of 908,000 square feet of office space. And countless other smaller buildings have been torn down or converted to residential use in the past four years as developers have taken advantage of more lucrative hotel, condo and rental projects. Meanwhile, three office projects totaling 217,000 square feet are under construction. Several brokers said they're concerned that pretty soon Downtown Brooklyn won't have enough Class B and C office space to meet increasing demand, since that type of space is generally added through renovation. Others, like City Point developer Paul Travis, said all the new residents moving to the area will make Downtown's Class A market, which has struggled over the years, more attractive to potential tenants. Developmental Darwinism at work, or poor planning?
Despite rezoning, a net loss of office space in Downtown Brooklyn [TRD]
Sales Going Well at BellTel Lofts [Brownstoner]
One Hanson Tower Units Hit Market [Brownstoner]
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Posted by: guest at April 9, 2008 9:52 AM
This raises an interesting question/point. It seems to me that one effect of the communications boom is a decrease in need for retail and office space. Many more people work from home and shop at home than did before the internet and today's modern communications infrastructure. If that's true, then how does that affect real estate? We've always said "nobody's making any more land" - but if we stop using it for certain purposes, then a lot more of it becomes available for other purposes - especially residential, since that has the lowest legal barriers. It's easy to convert an old warehouse or even factory into condos, but almost impossible (zoning-wise) to switch back.
Posted by: guest at April 9, 2008 10:03 AM
They made the argument regarding retail during the dot com days. Tons of industry rags talked about the death of bricks and mortar stores. In the past 10 years, there has been a retail boom.
As for office, downtown Brooklyn caters to backoffice users and law offices. These are not home office jobs, so I wouldn't worry.
In any event, the office vacancy rate in Manhattan is lower than it has ever been in the post-war era. That might change, but at the moment it does make sense to have office space outside of the Midtown core.
Posted by: Polemicist at April 9, 2008 10:39 AM
Converting downtown Brooklyn to only class A space is not a good idea. A lot of business, even in Manhattan, uses class B and C space and really doesn't need class A space. Its a nice idea in theory, but a waste of resources in the end.
Posted by: Karka at April 9, 2008 10:50 AM
By definition Brooklyn Class A - is Manhattan class B;
Brooklyn class B and especially class C is virtually unrentable to any large multi-national organization, it strictly goes to schlocky lawyers or if in interesting buildings - 'creative types'.
If Brooklyn wants to attract and retain fortune 500 back office operations like Jersey City - then a serious upgrade of available space is needed.
Posted by: guest at April 9, 2008 12:00 PM
Further evidence that the City prefers luxury housing to jobs. A short sighted recipe for economic decline. Class A space in Manhattan is down as well over the last 10 years, but I guess everyone can work as supers and janitors in the future.
Posted by: guest at April 9, 2008 12:40 PM
12:00
No, Brooklyn Class A = Manhattan Class A in terms of quality of build out and services provided.
Office market classes have nothing to do with rent, only with services that are provided and the quality of the building. Class A office space is the same all over the country.
Karka: No one builds Class B office space from the ground up. Class C office space is exclusively found in older, dilapidated buildings like in the Garment District. This kind of space has almost no amenities, low quality bathrooms, no doorman, etc.
Pretty much every business likes the services offered by Class A buildings. Who wants to waste the time and money hiring cleaning staff? Or risk not having a 24-hour doorman or security? It doesn't cost THAT much more for those services, especially in downtown Brooklyn where Class A office rents are about $30 to $35 a square foot. That's about the same rent as a crappy apartment in a walk-up in Park Slope.
Posted by: Polemicist at April 9, 2008 1:55 PM
bear stearns entire backoffice (soon to be vacated) is located downtown. that'll free up some space.
Posted by: guest at April 9, 2008 3:09 PM
Polemicist,
The point of 12:00 is (I guess) that a Class A office in Brooklyn is as attractive to a major corporation as a Class B office in Manhattan, because of location. That is a fair point, as location is inextricably part of the calculation of office choice for corporations.
Posted by: guest at April 9, 2008 3:15 PM
Polemicist,
The point of 12:00 is (I guess) that a Class A office in Brooklyn is as attractive to a major corporation as a Class B office in Manhattan, because of location. That is a fair point, as location is inextricably part of the calculation of office choice for corporations.
Posted by: guest at April 9, 2008 3:15 PM
Not that you can believe everything you read in the papers, 3:09, but there was an article in the Eagle that stated Bear Sterns was not moving out of MetroTech. Of course, that was before the serious bean-counting started....
Posted by: guest at April 9, 2008 3:29 PM
Downtown Brooklyn is a disaster. Stuck in time circa 1968. Everything they have tried to do there has made it worse. It is like a failed Soviet outpost.
Posted by: sam at April 9, 2008 3:36 PM
sam, residents will bring streetlife to the metrotech area.
Posted by: guest at April 9, 2008 5:46 PM
Or, more likely, the Metrotech area will suck life out of the residents.
Posted by: guest at April 9, 2008 11:26 PM
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