Commercial Klutch: August Edition

Today our anonymous embedded columnist delivers the third installment in what is now a monthly feature on the state of commercial real estate in Brooklyn…

As we are doing to a degree in residential real estate, Brooklyn is bucking the regional down-trend in certain commercial markets: retail; creative office space; mid-size Class A leasing; legal services. Example after years of having just a handful of law offices larger than 5,000 square feet, DUMBO’s 55 Washington (above) has a new 12,000-square-foot firm, 16 Court is getting one this fall and Weil Gotshal is placing 35,000 square feet of back-office in MetroTech sublet space.

While the bloom is off the commercial landlord’s rose in Manhattan, prices are up, pushing a certain number of tenants across the River. Tenants now paying $27 a foot in midtown south face a doubling of rent if they stay on that tourist trap of an island. Those with principals and staff living in our groovy borough look at low-$20s per foot in DUMBO for a big space, mid-$30s on Court or MetroTech, and they wake up and smell the gorilla coffee. We only need a few manhattan island tenants to fill space here, and you know, that is all we want.

MetroTech good news/bad news…

…So many large (for Brooklyn) direct leases have been signed that the landlord is down to a 9,000-square foot and a 12,000-square-foot space in One Pierrepont Plaza. Score one for Brooklyn Uniworld, specialist in urban marketing, took 38,000 square feet for $35.75 a foot for 10 years. Advertising/marketing tenants of that size in BK? Until now, fuggedaboutit. Other side of the coin Blue Cross, JPMorganChase, MorganStanley, Keyspan/Grid and SIAC are all subletting space. Talking seven figures worth…. Some of it taken, some in play. A year ago, we thought Class A in BK would be full by now. Nope.

So, Nu? What’s up with the hotel business? While three hotels are underway in DoBro, the Nu is open on Smith staggering distance from the bars and a Fairfield Inn for Gowanus is going ahead, more than a dozen projects are on hold or just plain dead. Financial markets are to blame. Banks lend too much, then too little. Our customers, clients, family and friends can fill the rooms. Build them and they will come. Promise.

Creative workspace is the future of Brooklyn. Manhattan’s creative population is said to have risen 6% in this century, while BK’s has popped over 20%. Which are the 3 counties in the US of A with the most creative professionals? New York, Kings and Los Angeles County. We are in the big time now. Thusly, DUMBO rules the roost in terms of the sheer numbers of leases done monthly. Nowhere else comes close. Gowanus has exploded, creatives are leasing in DoBro and Sunset is next. Look to design, art, new media, marketing, craft, IP law and computer services to power job and office space growth from now on.

CUNY has been negotiating almost since the 20th Century for a huge block of bargain sublet space. What’s taking so long?

Commercial Klutch: July Edition [Brownstoner]
Commercial Klutch: Downtown & Dumbo Edition [Brownstoner]