Rush for arena retail pushes prices sky high

By Sarah Trefethen

A prominent retail property across from Brooklyn’s newly opened Barclays Center Arena has sold in what some are saying is a record-setting deal for the borough.

The three-cornered building at 182 Flatbush Ave. served for 96 years as the home of Triangle Sports, a thriving independent business.
But the prospect of skyrocketing local real estate values led the store’s owners to list the 4,791 s/f building, with 1,597 s/f of ground-floor retail space, for sale in January.

It’s now been scooped up by a pair of Brooklyn investors in an all-cash sale of $4.1 million, or $911 psf.

That per square foot price is a new high for Brooklyn retail, according to Geoffrey Bailey, VP of retail services at TerraCRG. Bailey represented the buyer, RedSky Capital, and the seller in the deal.

Four hundred marketing packages went out on the property, Baily said, and the sellers received upwards of 50 written offers.
“It was a very competitive process,” Bailey said. “We’d gone out without an asking price initially, which brought a lot of interest in the property at a lot of levels. We had everybody from large institutional players to smaller investors who owned one or two buildings, to individual users looking to operate in the property.”

Restaurant and bar operators made up the bulk of the queries from would-be owner/operators, he said.

Benjamin Bernstein and Benjamin Stokes, the principals of RedSky Capital, declined to speak with Real Estate Weekly about the deal, and it’s unclear what the pair has in mind for the property. RedSky is also managing the joint venture that paid $66 million for a portfolio of contiguous mixed-use development sites in Williamsburg earlier this year.

Retail rents around the arena have been climbing steadily, Baily said. While rents were recently in the range of $50 to $85 psf, “we’re now seeing leases going up to and above $200 psf.”

The arena, which will host sporting and entertainment events, is expected to bring 3.3 million visitors to the neighborhood each year.
The triangle building is likely not the area’s last blockbuster deal.

“A lot of the owners in the neighborhood are holding on and are not selling,” Bailey said. “There are several properties in the immediate vicinity of the stadium that are vacant…. We’re going to be bringing two properties to market across from the stadium very soon.”
Among the business said to be looking for space in the area is Hooters Sports Bar, which sparked an outpouring of community opposition when their search became public this spring.

But the neighbors may not be able to hold back the tides of change.

In addition to those seeking to serve food and drink to the stadium visitors, Bailey said, many potential tenants in the area are looking for the brand exposure that will come with a prominent place in the growing entertainment hub.

“It’s considered what could be the Time Square of Brooklyn,” Bailey said.