The Real Estate Board of New York (REBNY), the City’s leading real estate trade association, today released its Summer 2021 Brooklyn Retail Report which highlights steady leasing in the Brooklyn retail market as tenants capitalize on market opportunities in select trade areas.
According to the report, demand is being driven primarily by retailers taking fully built spaces, while recently increased activity among national retailers and e-commerce firms supplemented activity in select corridors.
Despite the sustained leasing during the last six months, rents continue to slide lower in nearly all corridors. REBNY reported that asking retail rents throughout Brooklyn declined in 11 of the 17 reported corridors, with rents continuing to adjust amid New York City’s ongoing recovery from the pandemic. Average asking price per square foot (PPSF) rents throughout Brooklyn’s retail corridors fell by 10% or more in 10 retail corridors.
DUMBO was the retail corridor with the largest year-over-year decline, experiencing a 23% decline in average asking rents in that time period. Corridors with a strong residential base, such as Cobble Hill and Park Slope, have fared better in the current market. A Park Slope corridor, for example, experienced a 10% increase in average asking rent year-over-year.
“We continue to see the market adjust, creating new opportunities for both tenants and owners, as well as posing some challenges as we work to rebuild the City’s economy,” said REBNY President James Whelan. “It’s critical the public sector stay laser focused on the City’s recovery by adopting smart policies that drive strong economic development and increased business activity.”
Top brokers in Brooklyn noted the marked intensification in tenant lease commitments throughout the spring and summer. Retailers continued to focus on second-generation space. While this was a key driver of leasing, national retailers and some e-commerce firms have also started to jump into the market in a few corridors.
During 2020, an unprecedented amount of second-generation space was added along Brooklyn’s prime retail corridors. In 2021, the take-up of this fully built space was the key driver of steady leasing momentum. Realizing an opportunity to capture significant savings on build out-costs, particularly in locations that rarely come available, retailers started to commit to space early this year. This momentum continued throughout the summer. Recent openings include Aldama (91 S 6th St.); Harlem Shake (119 5th Ave); Sup Crab (664 Manhattan Ave); Ninety Nine Franklin (99 Franklin St)
“Brooklyn is comprised of many residential neighborhoods and is a melting pot. Since the pandemic, we have seen a proactive movement of leasing in these areas by national brands, who, preceding the pandemic, never looked at Brooklyn as a possibility for their flagship NYC brick and mortar,” said Mitzi Flexer, Senior Director of Brokerage at Cushman and Wakefield.
“Though retail prices hit a bottom very early in the year, the softening of prices over the past few years has allowed a lot of local operators to take prime high street space again, as landlords accept softer terms without rigid credit standards,” said Peter Schubert, Managing Director, Commercial Leasing at TerraCRG. “Brooklyn-based retailers have really led the market back, reversing the trend of the last 10 years.”
While the findings suggest a continued recovery in Brooklyn’s retail markets, brokers noted that the rebound is still in its early stages. The surging Delta variant of COVID-19, coupled with uncertainty over City and State government changes, could stem the progress. The continued decline in asking rents makes it clear that the market recovery is just starting – retailers may curb their appetite for space if external conditions deteriorate.
REBNY’S Biannual Brooklyn Retail Report is a joint effort by the REBNY Brooklyn Retail Advisory Group and the REBNY team. The report provides a snapshot of major retail corridors in the borough based on available ground-floor retail asking rent information. All data is sourced from the respective firms of each REBNY Brooklyn Retail Advisory Group member. The report includes the average price per square foot, median price per square, the lowest price per square foot and highest price per square foot for each of the 17 retail corridors tracked.
Download the complete Summer 2021 Brooklyn Retail Report here.