The ongoing redevelopment of the Empire Stores in Dumbo and its large office lease for West Elm forced all execs to consider Brooklyn as more than a back office location. Since then a Tech Triangle Economic Report has called for the creation of 3.1 million square feet of office space for Brooklyn’s Tech Triangle.
Released by the Brooklyn Tech Triangle Coalition — comprised of the Downtown Brooklyn Partnership, the Brooklyn Navy Yard and DUMBO Improvement District — the groups expect the creative and tech ecosystem will grow by 18,000 jobs over the next decade. To meet that demand, they recommend creating commercial and industrial working space, leveraging City assets to support commercial growth, investing in public spaces, and enhancing transit infrastructure.
The borough has become a good alternative for startups and those that need smaller spaces, said Keith DeCoster, director of U.S. Analytics for Savills Studley. “But for the ones that are second stage or 20,000 feet or 50,000 feet, there are not a lot of options in Brooklyn.”
That may be changing. Larger options for Brooklyn are coming as more investors are making bigger bets and leveraging various tax breaks.
At Willoughby Square in Downtown Brooklyn, Morris Baily’s JEMB Realty will now develop 400,000 square feet for new office and retail space at 420 Albee Square across from City Point.
Additionally, Tishman Speyer Properties is revamping the Macy’s at 422 Fulton St. and will create ten stories for offices on the top of the reconfigured department store. TSP also purchased Macy’s parking garage at Hoyt St. for a future project.
There is usually no focus on Brooklyn by Manhattan tenants until they think about the talent pool, said Keith Caggiano, Senior Vice President of CBRE.
But now, “gone are the days of the C-level suite dictating where the company goes,” agreed his colleague, Sacha Zarba of CBRE. When the heads of the companies realize 75 percent of the workforce lives in Brooklyn, “a lightbulb goes off,” explained Zarba, an executive vice president of CBRE, who helps techie firms in their space searches.
Tenants moving to Brooklyn can also, among other programs, take advantage of REAP benefits that provide a tax credit of $3,000 per employee for 12 years or cash back for the first five years if the taxes are lower. There is no commercial rent tax which hits Manhattan tenants below 96th Street whose rent is at least $250,000 per year.
Along the waterfront, Andrew Kimball, CEO of the 6 million-square-foot Industry City, says they are putting in $300 million to spruce up 2 million square feet of the 16-building project which is just a few blocks from three subway lines.
Industry City has room for everyone from tiny to huge. Along with big tenants like the Brooklyn Nets practice facility, Maker Bot and Time, Inc., it is adding local curated retailers and spots for artisans like glass blowers. Events with Brooklyn Flea, Smorgasburg and others are on-going. Rents still range from $15 to $30 per foot. “We want that eclectic mix,” Kimball said. He is also seeing more tenants seeking 50,000 feet to 100,000 feet that want to move from both the city and Long Island.
Down the street, the 1.24 million-square-foot Liberty View Industrial Plaza at 850 3rd Ave. in Sunset Park, now owned by Salmar Properties, has attracted Amazon for a distribution facility as well as a 30,000 square-foot Saks Off Fifth.
Bed Bath & Beyond and Koppers Chocolate are already tenants in the former Federal government-owned property. The city has also kicked in $3.5 million towards creating the 160,000 foot Manufacture New York which is targeted towards sustainable research, design, development and innovation for apparel, textiles and wearable tech.
In addition to the REAP, tenants here are eligible for the Industrial Business Zone (IBZ) Relocation Tax Credit which is a one-time tax credit of $1,000 per relocated employee, as well as discounted electricity and real estate taxes.
The Rudin Organization, Boston Properties and the Brooklyn Navy Yard are currently developing the dramatic 675,000-square-foot Dock 72 by S9 Architecture at the East River facility. Of that, WeWork will anchor 233,000 feet when it opens in 2017.
Michael Rudin, vice president of Rudin Management, said asking rents will run from the low-$60s per foot to mid $70s per foot. There are also no property taxes at the Navy Yard.
Both Rudin and Kimball said they are working on new ferry stops for their properties.
And the urban campus at Dumbo Heights is also coming along as Jared Kushner’s Kushner Cos., Aby Rosen and Michael Fuch’s RFR and Asher Abehsera of LIVWRK redevelop five former Jehovah Witness Watchtower buildings which Etsy and WeWork will anchor, while Ian Schrager is expected to redevelop its former apartment tower into a resort hotel.
Rents here are also in the $60s per foot.
In Bushwick, five interconnected but vacant warehouses at 215 Moore St. now dubbed the Bushwick Generator are being revamped by Heritage Equity Partners and Lichtenstein Group into 75,000 square feet of offices geared towards tech firms.
Asking rents here are $50 per foot.
A similar ground-up Williamsburg Generator is also coming to 25 Kent Ave.
