Brooklyn’s image as New York’s hub of hipness attracts residents from artists to bankers. Yet in at least one respect, the city’s most populous borough is struggling to live up to its hype.
A push to attract big-name companies for large offices in Brooklyn has so far come up short. Not one non-government employer has signed a lease for more than 100,000 square feet (9,300 square meters), a typical minimum size for a building’s anchor tenant, since mid-2015. Last year, the only deal that large was a renewal by the New York City Fire Department.
With about 7 million square feet of offices planned -- more than twice the space at the Empire State Building -- luring major tenants is critical to developers who see the borough as the next frontier for companies seeking state-of-the-art spaces and a more affordable alternative to Manhattan. Projects in the works include a waterfront complex at the Brooklyn Navy Yard and a conversion of former Jehovah’s Witnesses buildings that were purchased last year by a group including a company led by Jared Kushner, President Donald Trump’s son-in-law and now senior adviser.
“It’s going to take a little bit longer than some observers may think” for new office properties to be fully leased, said Zev Holzman, a Brooklyn-based commercial broker at Savills Studley Inc. “The tenant pool is not that deep. It’s not there yet.”
Brooklyn developers and landlords face the challenge of attracting tenants at a time when the Manhattan market is softening, making it less of a necessity for companies to look for cheaper alternatives. The borough also is set apart from the city’s corporate hub and its location makes it a difficult commute for people who live in New Jersey or New York’s northern suburbs, reducing the appeal for companies that draw employees from all over.
Tech Appeal
Developers have been betting that Brooklyn’s reputation as an epicenter of forward-thinking, creative living -- which has helped push home prices to record highs -- would appeal to younger workers, particularly in the technology industry, who want their jobs to be closer to their residences.
There are 23 office projects planned in Brooklyn, according to brokerage Cushman & Wakefield Inc. That would expand the current stock by about a quarter by 2020 if all are built, raising the possibility of a glut. Many projects involve taking old factories and warehouses from the borough’s industrial past and reconfiguring them to attract tech tenants.
Large tech companies that have settled in New York City, such as Facebook Inc. and Alphabet Inc.’s Google, have so far picked Manhattan almost exclusively. Spotify Ltd., the world’s largest music-streaming service, chose lower Manhattan’s 4 World Trade Center in a deal signed in February. IBM agreed last month to occupy almost all the space -- about 70,000 square feet -- at a Greenwich Village location of office-sharing startup WeWork Cos. IBM also is looking for about 300,000 square feet for its Watson artificial intelligence unit to supplement its offices in the East Village. An IBM spokesman declined to comment on any leasing the company may be considering.
It’s not that big companies are ignoring Brooklyn. They’ve just placed mostly smaller operations there. United Technologies Corp. -- whose brands include Pratt & Whitney aircraft, Otis elevators and Carrier air conditioning -- took 67,400 square feet at Empire Stores, a former 19th century coffee warehouse on the waterfront in Dumbo, to house what the company calls a “state-of-the-art digital hub.”