COMMERCIAL OFFICE

COMMERCIAL OFFICE VACANCY + RENTS

The overall office vacancy rate in Downtown Brooklyn increased to 22% in the second quarter, up 190 basis points over the past quarter, and 170 basis points yearover-year. This was anticipated, as 141 Willoughby Street added 357,000 sq. ft. of available office space to the market in Q2. Vacancy rates remain on par with Manhattan submarkets, all of which range from 22% to 24% vacant.

During the past quarter, Downtown Brooklyn experienced a significant increase in overall office rents, rising by over 5% year-over-year. This upward trend can be attributed primarily to the addition of the new, top-tier class A office space at 141 Willoughby Street, which accounts for approximately 11% of all vacant office space in the district. Asking rents at the new tower range between $68 and $80 per sq. ft.

Overall Office Vacancy by Submarket

Interestingly, the new office inventory in Downtown Brooklyn combined with Lower Manhattan’s declining rents and large direct and sublet vacanies has caused a shift in market dynamics. Downtown Brooklyn is no longer considered purely a value office market, as overall asking office rents have now surpassed those of Lower Manhattan by a notable 3% margin, or $1.80 per sq. ft.

Overall Average Asking Rent PSF by Submarket

Retail

New Retail Leases Across Downtown Brooklyn

Downtown Brooklyn saw 17 new retail openings and several new leasing announcements during the second quarter of 2023. Highlights include:

• Chelsea Piers Fitness and Field House unveiled their 103,000 sq. ft. gym at 645 Dean Street in Pacific Park. The fitness center also includes two turf fields, a basketball half-court, swimming pool, gymnastics facility and a coworking space.

• Imani Caribbean Grill opened a new location at 21 Flatbush Avenue. This is the restaurant’s third location and its second in Downtown Brooklyn.

• Other recent openings include: Dave’s Hot Chicken, at 345 Adams Street; Teriyaki One/Japanese Grill at 39 Willoughby Street; Stack’d Burger at 18 Nevins Street; Halal Munchies at 82 Livingston Street; Bora Bora at 408 Jay Street; and Uni K Wax at 326 Livingston Street.

• Kosher French bakery chain, Patis Bakery, announced a 5,100 sq. ft. full-service restaurant and bakery at 203 Jay Street, scheduled to open in late 2023.

• Wonder, a restaurant delivery service and ghost kitchen featuring menu items from over 15 restaurants, is coming to 310 Schermerhorn Street this fall.

• TATTER Textile Library, an interactive, ongoing artinstallation as well as academic research library, is expanding from Gowanus into Downtown Brooklyn’s cultural district. The new flagship space will open its doors next to BAM Strong at 230 Ashland Place in 2024.

Revival Of Legendary Paramount Theatre Underway

Renovations continue for the LIU Brooklyn Paramount Theatre at the corner of Flatbush and DeKalb Avenues. This project is reviving and modernizing the 95-year-old venue and bringing new entertainment to Downtown Brooklyn. The Brooklyn Paramount operated from 1928-1962 as a live performance venue and the first theatre in the world designed to show talking movies. Artists such as Frank Sinatra, Ella Fitzgerald and Miles Davis, performed at the venue. After closing its doors, the theatre became part of LIU’s campus, serving as a multi-purpose gymnasium space.

The theater will have a flexible seating configuration to accommodate general admission events for 2,600 people or 1,200-person seated events. Live Nation has a 25-year lease and anticipates opening in spring 2024.

Retail

New Retail Leases At City Point

City Point has announced several notable upcoming tenants in the sports and entertainment category. Court 16, a tennis and pickleball club, will open August 28 on the fourth floor. The facility will include 26,000 sq. ft. for eight courts for tennis courts or pickleball. On the horizon, The Escape Game, a popular national escape room chain, will be coming to Dekalb Market in early 2024.

City Point is also welcoming the addition of several new dining offerings, including:

• Brazilian steakhouse chain Fogo de Chao will open at full-service restaurant and bar. The steakhouse will take over 9,000 sq. ft. of the former Brooklyn Studios event space. Construction is underway and is anticipating a late 2023 opening.

• DIG, the healthy fast-casual chain, will open this September at Brooklyn Point at the corner of Willoughby Street and Albee Square West. Also coming soon to the base of the tower: Wright and Goebel wine and liquor store, One Medical and GoodVets.

• Dekalb Market Hall is nearing full occupancy after several recent openings. The market announced it will now extend its hours until 10 pm to cater to evening demand. Over 5 new eateries opened in the market this past quarter, including Italian restaurant Osteria Brooklyn, Cuban eatery Punto Cubano, Brazilian snack stand Petisco Brazuca and Asian-inspired ice cream stand Soft Swerve. In addition, Somethin’ Else, a cocktail bar offering live music, opened this past quarter, replacing Understudy.

RETAIL INVENTORY + RENTS

As of the second quarter of 2023, Downtown Brooklyn has 538 active storefronts. Of these, 38% are food and beverage establishments, 28% are dry retail stores and 34% services. However, it is worth noting that there are currently 117 vacant storefronts, resulting in a retail vacancy rate of 16.7%. There are an estimated 35 retail establishments coming soon to the neighborhood.

According to REBNY, ground floor average asking retail rents along Fulton Street (from Boerum Pl to Flatbush Ave) stood at $239 – a 22% jump year-over-year. Average asking rents are down over 33% from all-time high of $359 in Winter 2018.* Along Court Street (from Atlantic Ave to Pierrepont St), ground floor average asking retail rents stood at $192, up 9.7% from a year ago and 6% from Summer 2022. Currently, ground floor asking rents on Court Street range from $137 to $210 per sq. ft.* *Data