Dan Marks, TerraCRG
Since 2010, the Brooklyn real estate market has been surging. Over the course of the last four years, the total dollar amount of commercial real estate sales in Brooklyn has increased 397 percent with transaction volume up 151 percent. In 2010, $1 billion of commercial sales were completed, compared to more than $5 billion in 2013 — and projections for commercial sales in Brooklyn for 2014 are more than $6 billion.
Retail property sales in the first half of 2014 compared to the first half of 2013 have increased 33 percent in dollar volume and have seen a 12 percent increase in transaction volume. Brooklyn has become a true retail destination, with more national retailers than ever opening up shop. Barney’s Co-op is credited as being one of the first upscale retailers in the borough four years ago. J. Crew, Sephora, Nord-strom Rack and Whole Foods are several of the other nationally known retailers to make the move to Brooklyn. Apple is looking to open its first Brooklyn store, and the potential location of the store continues to be a widely discussed topic.
Brooklyn offers a dense concentration of consumers for retailers to serve. According to an economic development report from the Brooklyn Chamber of Commerce, there are 950,000 people that live within three miles of the Atlantic Center in Downtown Brooklyn compared to only 150,000 people that live within three miles of the Sunrise Mall in Nassau County.
The growth of the Barclays Center retail corridor is a prime example of the transformation of Brooklyn over the last few years. The Barclays Center broke ground in 2010 and opened in 2012, with retail rents around the arena more than doubling in the past four years. Current rents are as high as $250 per square foot.
Brooklyn is experiencing an influx of traditional Manhattan retailers looking to break into the Brooklyn market. Some notable tenants that have taken leases near the Barclays Center include Uniqlo, Shake Shack, Parm, Patsy’s Pizzeria, and Doughnut Plant.
The Pacific Park project is set to bring in 6,500 residential units along with 247,000 square feet of retail. In addition to the developments and influx of national tenants, the Barclays Center is also a major transportation hub offering nine subway lines and the Long Island Railroad, with the ability to be in Manhattan in less than 15 minutes. As a result, tourism has increased in the area which has improved business for local retail tenants.
The Barclays Center retail corridor serves as a microcosm to the entire Brooklyn market. Other retail corridors that have benefited from Brooklyn’s growth are Bedford Avenue in Williamsburg, Fulton Mall in Downtown Brooklyn and Court Street in Cobble Hill, just to name a few. Retail corridors in the surrounding area will continue to thrive as the demand for living space in Brooklyn increases. National and local retailers will continue to open locations throughout Brooklyn due to the affordable retail rents, compared to Manhattan, and the favorable demographics.
— By Dan Marks, Vice President of Investment Sales & Leasing, TerraCRG. This article first appeared in the August/September 2014 issue of Northeast Real Estate Business magazine.