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Feb 23, 2020

Welcome to the New York Office Market Update

Here we dig into the latest data and trends to find out what is really happening in the local Office market to help landlords, real estate investors, and developers make the smartest financial moves.

So, what’s new in Brooklyn Office Market? Let’s take a look at the numbers…

Although more new construction inventory appears to be hitting the market, creating more available office space, asking rents just keep going up. Big players like Microsoft and JP Morgan Chase continue to be bullish on NYC real estate and office space in the Big Apple.

We’ve even seen major retailers stage a comeback. That includes Nordstrom, Apple, and even a PayPal store.

Still, as Brooklyn office rents begin to compete with Manhattan’s, we’ve seen more major companies move and expand to Brooklyn. Even some from Fifth Avenue and Broadway.

Technology companies appear to still be the hottest and fastest-growing tenants. A group that can benefit landlords of small creative office lofts and new office buildings

Around 10% of all inventory is new or is still under construction and coming to the market from now through 2024.

 

In Brooklyn

Total inventory rose to 36.4M square feet

Percentage available for lease decreased to 15.8%

Absorption rate negative by 297,585 square feet

Asking rents are up to $40.45 per square foot on average

Asking rents in prime buildings in Bushwick and Williamsburg can be as high as $70 per square foot

At least 2.9M square feet of office space is under construction

 

Notable construction and renovation projects include:

Four new major large-scale developments hit the market in Q3 2019:

  1. Panorama - 733k square feet
  2. Dock 72 - 220k square feet
  3. 25 Kent Avenue - 508k square feet
  4. 341 39th Street, Sunset Park - 214k square feet

 

Notable upcoming projects include:

Notable relocations and expansions from Manhattan to Brooklyn include:

Although delivery of new construction is expected to decline until 2022, that is forecast to be the year we’ll see the delivery of more new office space hitting the market and taking off again through 2024.

 

Market Factors & Economic Indicators

Unemployment stood at 3.7% as of October 2019 according to the Federal Reserve Bank of St. Louis. This could be negatively impacted over the next year or two due to new rent control laws and sweeping new labor laws eliminating the freelance workforce. An estimated 60% of Brooklyn workers worked remotely in 2019. New taxes could also be a factor. In addition to SALT deduction caps and new transfer, mansion tax, and higher property taxes, as well as online sales tax, some presidential candidates are threatening an array of new real estate-related taxes and higher income taxes. All of which could negatively impact employment.

While the general economy appears to be holding strong for now, the 2020 presidential election and surrounding media mayhem and fake news is likely to lure many into waiting until after the vote to make their moves. Though following the herd in this way is sure to mean many missing out on the best leasing and acquisition opportunities.

 

In summary…

New York City office markets are perhaps in far better shape than retail. Notable global corporations continue to prize prime property here. Many are expanding their footprints, with more expanding into or relocating Brooklyn. This, in turn, is forcing up local rents.

While a surge in new deliveries of newly built and redeveloped properties may show up as historically high vacancy rates in the data, a tapering off of this activity through 2022 should bring balance again. New buildings continue to support higher asking rents per square footage. A trend likely to be further fueled as less square footage comes online.

Be sure to check out our multifamily reports for the latest data on the Brooklyn Residential rental market. As well as BK Lofts with over 40 creative loft buildings, private offices and art studio spaces.

Find out more about the current market, competing listings, and where to get the best help in leasing or finding the space you need by contacting The Ratner Team.

Check out our vendor section for all the best resources you need for renovating, financing, managing and protecting your real estate assets in New York. Plus, don’t miss our new report on Manhattan and Brooklyn Piers. Including where to go, how innovation is reinventing them as exciting places to hang out, workout and live.

Please send us your feedback, and let us know what you are experiencing in the market, and what you’d like more detail on in the next report…

Thanks for tuning in!