Average asking rents for available ground floor retail spaces increased year-over-year in five of the 17 Brooklyn corridors analyzed by the Real Estate Board of New York (REBNY) in its bi-annual Brooklyn Retail Report.
The retail environment in Brooklyn is witnessing some softening in asking rents in more established areas with low availabilities in prime retail spaces. Meanwhile, strong rent growth occurred in up-and-coming areas that are experiencing increased foot traffic due to new residential and commercial developments.
“The average asking rent changes in Brooklyn’s top retail corridors are reflective of both shifting national market conditions and unique, local neighborhood dynamics,” said John H. Banks, REBNY President. “As our commercial broker members have reported in Manhattan, our Brooklyn Retail Report Advisory Group members are seeing Brooklyn landlords reassess the value of their retail spaces and consider more flexible terms for storefront concepts that complement residential density and foot traffic.”
“Deal volume has improved over the past two quarters as rents catch up to tenant expectations,” said advisory group member Peter Levitan of LEVITAN. “Brooklyn has been experiencing a correction in retail rents since they plateaued in early 2016 to early 2018. They are now starting to flatten.”
Four of the five retail corridors surveyed in Williamsburg witnessed declines in ground floor average asking rents during the winter of 2019. Along Bedford Avenue, between North 8th Street and North 12th Street, the average asking rent fell to $147 per square foot (psf) representing a 17 percent year-over-year decline. Similarly, above Grand Street and up to North 8th Street, the average asking rent decreased 11 percent to $319 psf compared to the winter of 2018. According to REBNY’s Brooklyn Retail Advisory Group, over the past year, asking rents along the corridor underwent price corrections to levels that have fostered a recent uptick in retail transactions.
In Greenpoint, the ground floor retail average asking rent on Manhattan Avenue, between Driggs Avenue and Kent Street, rose nine percent to $70 psf, compared to the winter of 2018. On Franklin Street, between Meserole Avenue and Commercial Street, the average asking rent increased 23 percent year-over-year to $70 psf. This rise was attributed to a combination of increased local foot traffic from new, high-density residential developments along the Greenpoint waterfront and an increased willingness among owners to accommodate a diverse spectrum of tenants by building out retail space and providing long-term lease agreements.
ADDITIONAL HIGHLIGHTS FROM REBNY’S WINTER 2019 BROOKLYN RETAIL REPORT
– Average asking rents in Cobble Hill on both Court Street and Smith Street, between Atlantic Avenue and Carrol Street, fell 28 percent to $96 psf and 34 percent to $83 psf, respectively. For both corridors, these declines are credited to a lack of available prime retail space. Current listings may require significant build out and/or are concentrated in the lower-priced periphery of these corridors.
“While Cobble Hill rents are undergoing price adjustments; retailers are still signing leases along Court Street and Smith Street,” said advisory group member Mitzi Flexer of Cushman & Wakefield. “Prospective tenants remain present as new developments are rising along Atlantic Avenue and enhancing the area’s residential and commercial activity.”
– The average asking rent for available ground floor retail space on Seventh Avenue in Park Slope, between Union Street and Ninth Street, increased two percent to $117 psf in winter 2019 compared to the winter of 2018. The Fifth Avenue ground floor average asking rent, between Union Street and Ninth Street, also remained flat year-over-year at $95 psf.
“Fifth and Seventh Avenues are witnessing more retail absorption with a growing number of smaller tenants, who are signing more short-term leases. Food concepts continue to be the driving force in Park Slope,” said Jeffery Kessler of LEVITAN.
– In Brooklyn Heights along Montague Street, between Hicks Street and Cadman Plaza, the average asking rent fell 50 percent to $72 psf, compared to winter of 2018. This decrease was primarily caused by low availability and the corridor’s location. Most available retail spaces along the corridor are “walk-up” and “step-down” spaces, which are considered less desirable in comparison to typical storefronts.
“Montague Street has always been the quintessential Brooklyn Heights shopping and restaurant street. But now, with so many newly vibrant neighborhoods in Brooklyn, Montague now seems quaint and quiet,” said Curtis Woodside of Compass. “Current availabilities along the corridor mainly consist of older listings that had been temporarily rendered undesirable due to the amount of new construction, with premium retail already leased.”
The REBNY Brooklyn Retail Report Advisory Group includes: Robin Abrams and Curtis Woodside, Compass; Diana Boutross and Mitzi Flexer, Cushman & Wakefield; Peter Levitan and Jeffery Kessler, LEVITAN; and Hymie Dweck, Newmark Knight Frank.