- REAL ESTATE EDUCATION
- GIVING BACK
Winter 2022 Brooklyn Retail Report
April 28, 2022
Brooklyn’s retail sector registered significant tightening in several corridors during the last six months – particularly on streets with steady residential traffic. Activity occurred despite challenges presented by the Omicron surge, supply chain issues and other cost pressures such as staffing shortages.
These challenges curbed some of the leasing momentum, but it was hard to spot in the most competitive corridors. International luxury retailers and direct-to-consumer innovators continued to focus on Williamsburg, leaving North Brooklyn with negligible availability.
Brooklyn’s expanding residential base has been an essential steadying force for its retail sector during the ups and downs of the pandemic. Local retailers were active in several residential neighborhoods, depleting space options on Franklin Street in Greenpoint, Court Street in Cobble Hill and some sections of Park Slope. In turn, retailers are taking a closer look at secondary streets such as Manhattan Avenue and Smith Street.
Other corridors, such as Downtown Brooklyn, are still experiencing extensive residential development. Some large retail anchor stores remain vacant, reducing foot traffic. Rents are still adjusting in these corridors as well as on 86th Street in Bay Ridge.
Asking rent posted slight increases in the majority of the borough's corridors. Even with some increase in rent, asking rent is below its prepandemic peak in 16 of the 17 corridors. Asking rent on Fulton Street in Downtown Brooklyn, for example, is 45% below its peak of $359 in Winter of 2018.
Leasing activity would have been stronger but retailers and landlords had to adjust to the Omicron surge. While Omicron was short-lived, it did throw another curveball into the market. On the other hand, supply chain issues, staffing shortages and cost pressures have a longer shelf life. Some retailers delayed their leasing plans in response.
Tenants may have had second thoughts about leasing space, but shoppers did not hold back. Call it Covid-fatigue or Covid-be-damned – the appetite for dining, fitness/wellness, beauty and entertainment appears to be as strong as ever. With the Omicron curve flattened and robust demand from shoppers, brokers reported that tenants were back out in the market by February and March.
Brokers expect leasing to pick up this spring and summer thanks to several tailwinds. A number of new spaces are coming to the market and rents are still below their peak levels. These spaces will provide much-needed opportunities in some of the tightest and in-demand corridors like North 4th and 6th in Williamsburg as well as areas within Greenpoint.
Other corridors like Downtown Brooklyn stand to benefit from renewed tourism and more material after a return to office. Return to office has been gaining momentum since early March as major businesses push employees to work in person at least several days a week.