Downtown Brooklyn Q1 2024 Market Report

DOWNTOWN BROOKLYN Q1 2024 MARKET REPORT

Updated quarterly, this report provides insight on real estate market data, development progress and commercial leasing activity in Downtown Brooklyn.

DEVELOPMENT SNAPSHOT

Downtown Brooklyn Partnership’s (DBP) Development Matrix captures projects that have been completed since the 2004 Downtown Brooklyn rezoning, including development activity, project status and anticipated completion dates.

COMPLETED PROJECTS (SINCE 2004 REZONING)

22,559

2.8 M

UNDER CONSTRUCTION + PIPELINE PROJECTS

2,368

7,763

697 K 103

For more detail information, please see the full Q1 2024 Development Matrix summary and map at: https://www.downtownbrooklyn.com/news/report/downtown-brooklyn-development-matrix/

COMMERCIAL OFFICE

COMMERCIAL OFFICE LEASING

The New York City Police Department Special Victims Unit has renewed its lease for 42,179 sq. ft. at 45 Nevins Street for another year. Additionally, NYPD has renewed its lease for 5 years at 300 Gold Street, taking up the entire 6-story, 52,000 sq. ft. building along Flatbush Avenue.

Latitude Food Allergy Care, a food allergy testing clinic, has signed a new lease at 32 Court Street for 5,351 sq. ft.

COMMERCIAL OFFICE VACANCY + RENTS

In the first quarter of 2024, office asking rents in Downtown Brooklyn increased by 3% over the preceding quarter to $58.17 per sq. ft. Overall vacancies, standing at 21.5%, decreased by 20 bps over the past quarter. However, vacancy rates are up 140 bps year-over-year.

Downtown Brooklyn is outperforming Lower Manhattan in terms of rental growth and vacancy rates. While Downtown Brooklyn’s vacancy rates slightly decreased over the past quarter, Lower Manhattan saw a 1pp increase. In addition, Downtown Brooklyn’s average office rent is now $2.40 more per sq. ft. than in Lower Manhattan, widening the rental split that has taken hold after the pandemic. This gap may be more significant

Overall Office Vacancy by Submarket

Overall Average Asking Rent PSF by Submarket

when accounting for net effective rents. This shift is attributed to the influx of new Class A office inventory in Downtown Brooklyn and a large amount of direct and sublet office space in Lower Manhattan, signaling a reduced competitive advantage for budget-conscious office users in Downtown Brooklyn. For instance, Lower Manhattan has 21 million sq. ft. of direct and sublet space available for lease, compared to 3 million sq. ft. of direct and sublet space in Downtown Brooklyn.

Midtown and Midtown South submarkets in Manhattan has seen average office rents remain relatively stable at $77-$78 per sq. ft. Vacancy rates remain above Downtown Brooklyn’s at 22.8% and 24.3%, respectively.

Source: Cushman and Wakefield

RETAIL

NEW RETAIL LEASES ACROSS DOWNTOWN BROOKLYN

Downtown Brooklyn saw 13 retail openings and several new leasing announcements during the first quarter of 2024. Highlights include:

• Guitar Center announced it will be relocating from Atlantic Terminal to 540 Fulton Street. The music retailer will occupy 19,000 sq. ft. across the ground floor and lower level and plans to open in fall 2024.

• One Boerum Place will soon have the first Chop’t location outside of Manhattan, at the corner of Fulton Street. Blank Street Coffee is also coming to One Boerum Place on the corner of Red Hook Lane, with an expected opening in summer 2024. In addition, Salons by JC recently opened on the second floor of the building.

• Two new daycare and school facilities have joined the neighborhood. Downtown Brooklyn Childcare opened at 173 Schermerhorn Street, while the Brooklyn Montessori School signed a 4,000 sq. ft. lease at 99 Fleet Place.

• At 310 Livingston Street, PUPS Pet Club opened, offering doggie daycare, grooming and training services. Tend Dental also announced a new location at the building.

• Several new restaurants have popped up in the neighborhood: popular brunch destination Woodland has opened at 572 Fulton Street, replacing Las Santas, and Roseli Chinese opened inside the Sheraton Hotel at 228 Duffield Street. Additionally, the popular chicken fingers restaurant, Raising Canes, debuted at 447 Fulton Street.

• The Travel Agency opened at 120 Flatbush Avenue, becoming the first state-licensed cannabis retailer to open in Downtown Brooklyn. Another state-licensed cannabis shop, Happy Munkey, is coming soon to 453 Fulton Street.

City Point is debuting several new retail and dining offerings:

• Brazilian steakhouse Fogo de Chão opened in April. With an entrance on Flatbush Avenue via the Prince Street passage, the 9,000 sq. ft. restaurant can accommodate over 200 guests and features a full bar and private dining spaces.

• The Escape Game debuted adjacent to DeKalb Market Hall. The 4,900 sq. ft. location includes six themed rooms offering immersive experiences for family entertainment and gaming enthusiasts.

• New healthcare services for both humans and their pets are opening this summer: One Medical and Good Vets. Wine and spirits retailer Wright & Goebel is also relocating from Livingston Street this spring.

• Construction is underway at Sephora. This will be the third Sephora in Downtown Brooklyn and we anticipate a summer 2024 opening.

Fogo De Chao opens at City Point

Credit: Fogo De Chao

Guitar Center opening at 540 Flatbush

Credit: Guitar Center

GRAND OPENINGS

ABOLITIONIST PLACE DEBUTS IN DOWNTOWN BROOKLYN

Abolitionist Place, the 1.15-acre public open space fronting Willoughby Street, Albee Square West and Duffield Street opened in early May 2024. The park includes a playground, dog run, water feature and ample seating areas. Additionally, there will be a site-specific public art installation in the future by Kenseth Armstead commemorating the Abolitionist Movement. The park was designed by Hargreaves Jones, developed by NYCEDC and will be maintained and programmed by DBP.

The park is idealy located in the heart of the neighborhood, surrounded by shops, homes, offices, hotels, and schools. It is situated less than a block away from Fulton Street and Albee Square. The park borders several notable places like City Point, Brooklyn Point, two hotels (Aloft and Sheraton), and new class A office space at 141 Willoughby and One Willoughby Square.

HISTORIC BROOKLYN PARAMOUNT GRAND OPENING

The Brooklyn Paramount, Live Nation’s new 2,700-capacity venue at the corner of Flatbush and Dekalb Avenues, has opened its doors with its debut concert on March 27th. Since the, numberous performances have already sold out during the spring and summer seasons. The venue has announced more than 60 shows through October.

The concert hall first opened in 1928 and was purchased by Long Island University in 1954 and converted into a gymnasium. Planning, design, and construction for the $50 million project took over five years. Significant investments preserved the venue’s historic

RESIDENTIAL RENTS

The average residential rent in Downtown Brooklyn was $4,763 in March 2024, up 7.2% year-over-year. This increase in rents was driven by studios, which saw a 9.2% hike from last year, with one-bedrooms seeing a 7.2% increase.

Of the neighborhoods surrounding Downtown Brooklyn with the largest year-over-year increases, the only surrounding neighborhood that experienced higher average rent increases than Downtown Brooklyn is Cobble Hill (16.27%), whereas Boerum Hill (-5.16%), Fort Greene (-3.62%) and Dumbo (-0.54%) saw a declines compared to last year.

Average Residential Rents in Downtown Brooklyn

Average Residential Rents in Downtown Brooklyn by Unit Size, 2020-2024

Source: MNS

RESIDENTIAL SALES

The median sales price in Downtown Brooklyn for new condominiums was $1.54 million in Q1 2024, a decrease of 22.8% compared to the previous quarter and 20.9% compared to the same quarter last year. The median price per square foot, $1,718, stayed the same quarterover-quarter and rose 4.2% year-over-year.

In total, 41 new condo units sold in the neighborhood— about double the units sold in the previous quarter. 46% of these condos were one-bedroom units, while 49%

were two or more-bedroom units. Downtown Brooklyn also accounted for 40% of all studios sold in the borough in Q1.The units sold in Downtown Brooklyn accounted for 12% of sponsor sales volume, the third most active submarket in the borough.

Across Brooklyn, the median price per square foot increased by 10.4% year-over-year, from $1,261 to $1,392. Brooklyn’s overall median sales increased 14.6% over the past year from $1,042,500 to $1,195,000.

Median Residential Sale Price Per Square Foot - Downtown Brooklyn New Development

Source: MNS (Q1 2024). Data includes first-offering sponsor sales at walk-up and elevator new development condominium buildings, as well as new conversion

Median Residential Sales Price Per Sq. Ft. - Downtown Brooklyn New Development

Median Price Per Square Foot- Downtown Brooklyn

In March 2024, foot traffic throughout the neighborhood was up 3.7% compared to the same time last year, equating to more than 2,800 daily pedestrians. Comparing March 2019 to March 2024 data shows the neighborhood has recovered 71% of pre-pandemic foot traffic. The greatest year-over-year increases were experienced by the 1 Metrotech (30%), Willoughby Plaza (16.3%), and the Fulton + Adams (13.9%) locations.

Throughout the district, weekends had a greater recovery rate in March than weekdays, with a 24% increase year-over-year, compared to just 5% on weekdays. This suggests a significantly higher rebound for non-work related activities compared to the recovery of return-to-work. Despite this, the weekdays are still the most active days in Downtown Brooklyn, experiencing an average of over 45,000 more daily pedestrians compared to weekends.

Brooklyn Average Daily Foot Traffic by Location, March 2019-2024

Placer AI is a popular and widely cited location intelligence and foot traffic data software system. The software collects and aggregates geolocation data from mobile devices. With Placer, DBP will be able to gain insights into consumer foot traffic, brand market share, trade area and demographic trends. The data also overlays with Census data, so DBP can easily incorporate demographic trends (age, race, income, etc) into its analysis. If your team would like to learn more about opportunities for custom placer.ai research regarding your Downtown Brooklyn interests, please reach out to mlandolina@ downtownbrooklyn.com.

SUBWAY RIDERSHIP

In March 2024, the average daily subway ridership across all Downtown Brooklyn stations saw a 3% increase yearover-year with 3,500 more daily subway riders starting in Downtown Brooklyn each day. Subway ridership has recovered 69% of March 2019 levels.

Ridership increased 29% on weekends year-overyear with about 2,000 more daily riders than last year. Weekdays saw a slight dip, with 1.5% fewer riders yearover-year.

• All stations, except for Borough Hall/Court Street (2,3,4,5,R), experienced year-over-year increases in ridership. Renovations to Court St (R) station were completed in January 2024, which may have caused the recent dip in ridership.

• The Hoyt St (2/3) station experienced the largest percentage bump in ridership year-over-year, with 800 more daily riders, a 14% increase. This increase may be due to the new subway entrance on Fulton Street added in late September 2023. The MTA opened a new accessible entrance serving the southbound platform at the Hoyt Street station. The entrance was constructed and paid for by Macy’s. Jay Street-MetroTech (A,C,F,R) had the second highest percentage bump in year-over-year ridership, at 8%.

• The Hoyt-Schermerhorn (A/C/G) station has the greatest recovery post-pandemic, recovering 83% of March 2019 ridership.

Downtown Brooklyn Average Daily Subway Ridership by Station, March 2019-2024

CITI

BIKE RIDERSHIP

Over 83,000 Citi Bike riders utilized one of Downtown Brooklyn’s 19 Citi Bike stations in March 2024. Ridership was up 22% year-over-year, with over 15,000 more riders, and up 93.8% since March 2019.

Top Docking Stations Rides

PROPERTY SALES

• 383-393 Pearl Street, the 5-story, 27,274 sq. ft office building at the corner of Willoughby St and Pearl Streets, has been purchased by Brooklyn Friends School for $19.25 million. The building was formerly owned and occupied by the now-defunct ASA College. While plans are still being determined, the purchase will potentially enable Brooklyn Friends to consolidate into a single campus. The school currently operates its primary school at 375 Pearl Street and its upper school at 116 Lawrence Street.

DEVELOPMENT OVERVIEW

As of Q1 2024, Downtown Brooklyn development includes:

• Watermark Capital purchased the Hanson Place Central United Methodist Church at 144 Saint Felix Street for $15 million. Plans for the site are still to be determined.

• St. Louis-based Midas Hospitality purchased the nearly complete 22-story, 100-key hotel at 291 Livingston Street from Hello Living and Aview Equities for $34.8 million. The hotel was near completion in May 2022 when it entered bankruptcy.

• 145 projects completed since the 2004 rezoning, including 22,559 residential units (of which 4,555 are affordable), 2.8 million sq. ft. of office space and 2.5 million sq. ft. of retail.

• 20 projects under construction including 17 with 5,455 residential units (1,436 of which are affordable) and 122,000 sq. ft. of retail.

• Another 24 projects planned, including at least 2,308 residential units (of which 512 will be affordable).

22,559

5,455

RECENTLY COMPLETED

2,308

• 505 State Street, The Alloy Block: The tower received its first certificate of occupancy in late March and residents began to move in early April. Alloy Development’s 44-story building includes 440 rental units, including 45 units of affordable housing, 14,000 sq. ft. of ground floor retail spaces along Flatbush and 500 bicycle parking spaces. The two schools will be operational by fall 2024. Phase two at 80 Flatbush Avenue will include a second, larger tower and will include residential, office space and a cultural center.

The Alloy Block at 505 State Street

ONGOING CONSTRUCTION

RESIDENTIAL RENTS

• 9 Chapel Street: Tankhouse Development is wrapping up construction on its 13-story building that will include 27 market-rate condo units. Residents are expected to begin moving in early summer 2024.

• 240 Willoughby Street: Adjacent to The Brooklyn Hospital Center campus, Rabsky Group’s 30-story, 300-unit building at 240 Willoughby Street continues interior buildout. The tower, fronting Fort Greene Park, will include 147 affordable units. Rabsky is also renovating the existing 21-story, 189-rentalunit tower at the site. The new tower is slated for completion in early 2025.

• 625 Fulton Street: Facade work takes shape at Rabsky Group’s 35-story residential building. The building will have 1,044 rental units, with 313 affordable units, and a 250-car parking garage. Additionally, there will be 46,000 sq. ft. of commercial retail space, including a 26,000 sq. ft. grocery store. The building is anticipated to be completed in early 2025.

• 15 Hanover Place: Construction progresses towards completion at Lonicera Partners’ 34-story tower on the corner of Hanover + Livingston. The project will include 314 rental units, 95 of which are affordable, and 9,000 sq. ft. of retail space. Completion is estimated in fall 2024.

• 55 Willoughby Street : Foundation work is complete, and the superstructure is rising for Lonicera Partners’ 38-story, 295-rental unit residential tower. The building will include 89 affordable units and 3,500 sq. ft. of retail space. Nearly 107,000 sq. ft. of air rights were transferred from 57 Willoughby Street.

• 111 Willoughby Street: The Triangle Equities/The Michaels Organization’s tower has topped out and the façade is being installed. The 40-story tower will bring 227 rental units, 69 of which will be affordable. There will also be a 20,000 sq. ft. ministry center for the neighboring Oratory Church of St. Boniface. The site includes 16,000 sq. ft. of air rights transferred from 115 Willoughby Street. The development is slated for completion in Spring 2025.

• 98 DeKalb Avenue: Rockrose’s 49-story residential tower is quickly ascending and topping out is expected this July. Located along Ashland Place across from The Brooklyn Hospital Center, the tower will yield 569 rental units, 171 of which will be affordable, and 3,775 sq. ft. of retail space. Completion is expected in late 2025.

• The Brook at 565 Fulton Street: Witkoff and Apollo’s 51-story residential tower, The Brook at 565 Fulton Street, will top out this May, while interior fit out has begun on the lower floors. The superstructure located at the corner of Fulton and Flatbush will have 591 rental units, including 178 affordable units. The project also includes 25,000 sq. ft. of retail space at the base of the tower and a jewel-box site next to Albee Square. The tower anticipates occupancy in late 2025.

• 89 DeKalb Avenue: Foundation work is complete and the superstructure has begun to rise at RXR’s 30-story, 324-unit tower. The fully-electric project will include 98 affordable units and 55,000 sq. ft. of academic and office space will be used by Long Island University at the base. A late 2025 completion is expected.

• 71 Prince Street/202 Tillary Street: Madd Equities’ 31-story residential complex will yield 465 rental units, including 118 affordable units, 4,000 sq. ft. of retail space, and 40- 50 enclosed parking spaces. 71 Prince Street is expected to be completed by late 2025.

• 101 Fleet Place: The Jay Group’s 21-story mixeduse tower has topped out. The tower will have 294 rental units (including 74 affordable units), 4,500 sq. ft. of retail space and a 44-car parking garage. The building anticipates a 2025 completion.

• 150 Lawrence Street: The superstructure has begun to rise at Twin Group Associates’ 25-story, 101-rental unit residential building. The tower will have 8,200 sq. ft. of retail space and expects a 2026 completion.

RECENTLY STARTED CONSTRUCTION

• 19 Rockwell Place: Foundation work is underway at Brookstone Developers’ 27-story building with 174 rental units.

• 88 Schermerhorn Street: Excavation and foundation work is underway at Jankos Group’s 20-story building with 58 rental units, including 14 affordable units.

• 362-370 Livingston Street: Developing NY State continues demolition work on the existing 8-story building to make way for two 22-story buildings, totaling 249 units according to DOB records. The site will include 7,162 sq. ft. of retail space.

NEWLY ANNOUNCED DEVELOPMENTS

• 205 Montague Street: Landau Development recently filed plans for a 47-story, mixed-used tower. The 530,000 sq. ft. tower will include 286,000 sq. ft of residential space (for 136 condos), 244,000 sq. ft. of commercial space and a 100-car parking garage.

IN THE NEWS

Op-ed | Unlocking NYC’s economic potential with ‘City of Yes’ zoning reform

Guitar Center

Moving Up to New Downtown Brooklyn Digs at The Paxton

St. Louis-based hospitality firm buys Downtown Brooklyn hotel project out of bankruptcy

‘Bright starts and bold futures’: 7 new public schools to open in Brooklyn this fall

• 570 Fulton Street: Developing NY State began excavation for a 23-story, 163-rental unit residential tower (including 33 units of affordable housing), according to DOB records. The building will also have 5,200 sq. ft. of commercial space. The vacant site was sold for $24 million by Davis Companies to Developing NY State in early 2023.

• 95 Rockwell Place: Charney Companies has begun demolition work at the site of the proposed 38-story residential tower. The building will yield 158 units, as well as 33,000 sq. ft. of commercial space.

The project lot includes the adjacent 14-story office building at 195 Montague Street and 6-story office building along Cadman Plaza.

Developer plans 47-story Brooklyn Heights tower

Brooklyn Scores With the First AllElectric Building in New York City

Settling, in Downtown Brooklyn

Live Nation Adds to New York Portfolio With Opening of ‘Beautiful Masterpiece’ Brooklyn Paramount

POLICY NEWS

NEW YORK STATE PASSES HOUSING DEAL

Following lengthy budget negotiations, Governor Hochul and the New York State legislature announced a deal on new housing legislation that will greatly impact housing development in NYC for the next decade. Below are some highlights of the anticipated housing development policy changes:

• The 485x program will replace the 421-a program that expired in June 2022. The 421-a construction deadline for vested projects has been extended until June 2031.

• The new 485x program stipulates permanent affordability. The required affordability component ranges from 20-25% or 50% rent stabilized, depending on the building size with area median incomes (AMIs) ranging from 60-80%. The new program gets rid of the highest-income option of the expired 421-a program (130% of AMI).

• Tax benefits from 485x range from 10-40 years depending on location and building size. The program expires June 15, 2034.

CITY OF YES ECONOMIC OPPORTUNITY

The City Planning Commission voted in favor of “City of Yes Economic Opportunity” proposal and the City Council is now reviewing. The City Council is expected to vote on the proposal by late May. The goals of these citywide zoning changes will support small businesses, entrepreneurs and drive economic growth. The proposal is the largest overhaul of the City’s commercial and manufacturing zoning in 60 years.

The proposal includes 18 policy changes that would expand options for businesses to locate near their customers, support growing industries and sectors, foster vibrant neighborhoods and commercial corridors, and provide businesses with clear zoning rules. Among these changes, the proposals include but are not limited to:

• Expand the number of businesses able to open in ground- and upper-floor spaces;

• Eliminate outdated rules that prohibit dancing, comedy, and open mic nights in restaurants and venues in commercial areas, and instead govern venues by size and volume;

• City-wide minimum-wage increases on construction projects larger than 150 units.

• The 12 FAR (floor area ratio) cap is expected to be lifted through a City of New York local zoning actions. The proposed City of Yes for Housing Opportunity aims to create two residential districts with a FAR of 15 and 18.

• Office to residential conversions require 25% of units at an average of 80% AMI and a band of 5% of units at 40% AMI. The length of the benefit ranges from 25 to 35 years, depending on when the application is filed. The FAR cap removal is also expected to help conversions pencil out.

• The housing legislation also includes details on good cause eviction and individual apartment improvements.

• Update 1960s-era rules that limit where amusements are allowed, so experiential retail and family-friendly activities can be located closer to where New Yorkers live;

• Modernize how zoning regulates laboratories so life sciences research can flourish in offices and near universities and hospitals;

• Fill empty storefronts by fixing decades-old rules that ban businesses from setting up in certain longterm vacant facilities;

• Allow a wider range of businesses, including barbers and interior designers, to be based in homes; and

• Facilitate adaptive reuse of commercial buildings by modernizing loading dock rules, among other critical updates

The City Council is expected to vote on the “City of Yes Economic Opportunity” proposal by late May. Lastly, the public review process kicked off in late April 2024 for the final City of Yes proposal on housing.