Office Boom Denied: New Shiny Spaces In Brooklyn Fail To Attract Big-Name Tenants
If the anticipated office boom in the borough isn’t happening—who is going to occupy all freshly-developed space?
The news about Brooklyn becoming a new heavyweight champion in office leasing has been circling around for a minute. Etsy, Slate, Vice Media—as these giants opted to set their headquarters in Brooklyn, it seemed safe to predict that others (and by “others,” we mostly mean tech startups and creative companies) will follow the lead.
The upcoming mass migration of companies to NYC’s hippest borough actually made sense. Brooklyn, innovation, and ping pong tables in the middle of the office—these are things that go together well. And, since cool warehouses with exposed brick walls aren’t everybody’s cup of tea, creating seven million square feet of new state-of-the-art office space to accommodate the anticipated exodus made sense, too. Or did it?
The new office hubs that came (or are coming) to Brooklyn in recent years are nothing short of stunning. The huge waterfront complex at the Brooklyn Navy Yard, the former Watchtower Building, the Wheeler — all these projects can rival Manhattan’s finest glassy structures. The area itself has acquired reputation of an ultimate beehive and the epicenter for all things progress—we are the new Silicon Valley, Y’all! These prime offices are all set and ready to accommodate innovative tenants of the future. Except—these tenants aren’t exactly eager to claim the space.
Well, at least, not the highly-coveted corporate giants. All these new hubs have been built with big-name companies in mind—anchor tenants, who would take up at least 100,000 square feet. As it turns out, there aren’t any takers. Bloomberg Market reports that “not one non-government employer has signed a lease for more than 100,000 square feet since 2015.” In fact, the only deal of this scale was last year’s lease renewal by the New York City Fire Department — so much for tech and innovation companies.
Which, now that you begin to think of it, is kind of logical. It’s all well and good to set up your headquarters in the epicenter of innovation—until you have to break the news to those unlucky innovators who would now have to commute to the “beehive” from Bronx, Queens, and New Jersey. We’d say, expect lots of eye-rolling and loud groaning. Add to that limited and surreal coffee options — places near Navy Yard are taking the very definition of ‘hipster’ to the next level by not accepting cash – and you might just have a full-scale revolt on your hands.
Besides, it’s not as if Manhattan’s office market is going down without a fight. The median rent in the borough is slowly sliding. Add to that a record number of concessions offered by desperate landlords. Suddenly, moving your 1,000 employees across the river doesn’t seem so inevitable, after all. Meanwhile, there are 23 new office projects planned for Brooklyn by 2020. Which begs the question: If the anticipated office boom in the borough isn’t happening—who is going to occupy all this space?
Well, somebody will — we won’t go as a far as predicting an apocalyptic vision of abandoned glassy towers, glorious in their emptiness. It’s just that the developers might have to go after smaller fish and refocus their marketing efforts on local businesses and mid-size companies. And, of course, make sure that a fraction of the space is reserved for a Deli or a coffee shop that doesn’t charge an arm and a leg for a cup of Americano.
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