65.5% 46.9%

N EXT STOP, BR OO K LY N
During the past several years, institutional investment in
Brooklyn has surged. In fact, since 2012, major institutions
have invested nearly $650 million in Brooklyn office and flex
product. These new owners have launched significant capital
improvement projects—with more in the planning stages—to
modernize and adapt existing structures for more functional
use while maintaining architectural and aesthetic integrity.
At the same time, the public sector has demonstrated its
commitment to the area by announcing planned infrastructure
improvements, including new and supplemental transit
options and the delivery of world-class parks and community
spaces.
In addition to the initial investment for existing product and land
sites, the new development and renovation plans proposed by
new owners further reinforce confidence in the future state of
the commercial market in Brooklyn. JLL currently represents
two of the most significant new projects in Brooklyn: the onemillion-square-foot Building 77 in the Brooklyn Navy Yard and
the 450,000-square-foot Empire Stores property in DUMBO.
Each incorporates major redevelopment budgets that have
begun to reposition the properties and redefine perceptions
of their surrounding areas.
A key driver for the institutional interest in Brooklyn is the
ongoing demographic shift in the borough, specifically the
northern edge, which can be roughly captured in seven zip
codes. During the past decade, Brooklyn has become widely
known as the residential destination of choice for young
professionals and creatives seeking the amenities of the
borough’s dynamic live/work/play environment. The statistics
are remarkable. The number of housing units in this area
of Brooklyn has grown by 18.2 percent since 2000, and is
projected to increase by an additional 6.8 percent by 2019.
The majority of the population—56.3 percent—is between
20 and 49 years old. A full 66.0 percent of residents have a
college degree, and 19.7 percent have a graduate degree.
•
•
•
Institutions have purchased office and flex properties totaling nearly $650 million in Brooklyn since 2012
Housing units in northern Brooklyn have grown nearly 20 percent since 2000
The broader Brooklyn market represents over 45 million square feet, of which 33 million square feet is concentrated
in six primary commercial submarkets
The demographic profile of northern Brooklyn, coupled with the character
of the commercial inventory, is reminiscent of Manhattan’s Midtown
South market a decade ago, as it began to experience enormous
growth in commercial value and appeal. Until the late 2000s, Midtown
South offered plentiful opportunities for creative companies seeking
inexpensive space. Today, Midtown South has fully transitioned from
a low-cost option to one of the country’s most coveted submarkets. At
$79.97 per square foot, asking rents for Class A space were the most
expensive in New York City in the first quarter of 2015. Brooklyn is home
to a large concentration of TAMI-sector employees, and is positioned to
serve the growing needs of one of the most active tenant segments in
the New York City market.
Recent leasing activity in Brooklyn from expanding creative companies
has highlighted this emerging trend, especially in DUMBO. Etsy
expanded to nearly 195,000 square feet in DUMBO Heights, WeWork
recently signed a 90,000-square-foot lease in DUMBO Heights, and
Huge renewed and expanded to a total of 78,000 square feet at 45
Main Street. The market has also seen a growing volume of activity by
high-profile companies seeking 50,000 square feet of space or more.
In the last 90 days, more than two dozen tenants with an aggregate
space requirement exceeding four million square feet of space have
either toured or expressed substantial interest in Brooklyn, and paper
is trading on a number of major deals. Future tenant activity will come
from three categories: organic growth from creative and start-up tenants
currently within Brooklyn, migration of tenants from Manhattan, and
transplants from out-of-market. Brooklyn incentives, which represent a
potential annual savings of $15 to $20 per square foot and bring the
cost of occupancy down to a fraction of that of Midtown South, are very
important considerations.
Brooklyn opportunities are not limited to DUMBO and Downtown
Brooklyn, which make up less than half the total inventory by square
footage. The broader Brooklyn market represents a total of 45.2 million
square feet of space—comparable in size to Austin, Charlotte, Raleigh
/ Durham, and Sacramento—and necessitates similar scrutiny from
prospective occupants and investors as Manhattan.
JLL’s Next Stop, Brooklyn establishes six core submarkets and creates a
new classification for commercial space to reflect the unique personality
of the current Brooklyn inventory. The report organizes space into three
categories: Brick and Beam, Traditional Office, and Flex. The Brick and
Beam category covers new and renovated existing buildings catering
to tenants in the TAMI sector, as well as tenants seeking production,
design and studio use, among others. DUMBO currently has the greatest
concentration of high-quality Brick and Beam space, with asking rents as
high as $65 per square foot. Brick and Beam space is available beyond
DUMBO, however, and likely will be a dominant category in future years.
Flex space caters to a wide range of tenants, from “makers” to creative
office users, and is generally priced at a discount to Brick and Beam
options.
Brooklyn has clearly reached a tipping point for commercial real estate
stakeholders, and there is enormous value potential in the near- and
long-term. JLL established Brooklyn’s primary commercial submarkets
to reflect existing neighborhoods and use patterns, to organize similar
commercial inventory and to identify opportunities for future growth.
Areas that currently do not have significant office use will likely form
additional submarkets in the future.
NO TA BL E OF F I C E I N V E S TME N T S A LE S FROM 2 0 1 2 TO PRESENT
Purchaser
Property
Submarket
s.f.
Jamestown / Angelo, Gordon & Co. / Belvedere Capital
Industry City
South Brooklyn Waterfront
5,666,252
Kushner Companies / RFR / LIVWRK / Invesco
DUMBO Heights Portfolio
DUMBO
RXR Realty / American Landmark Properties
470 Vanderbilt Avenue
Atlantic Avenue Corridor
650,000
$198,750,000
$305.77
SL Green Realty
16 Court Street
Downtown Brooklyn
317,625
$62,530,000
$196.87
Madison Realty Capital
29 Ryerson Street
Flushing Avenue Corridor
192,240
$45,000,000
$234.08
BFC Partners
1000 Dean Street
Flushing Avenue Corridor
169,446
$11,000,000
$64.92
LIVWRK
160-168 Van Brunt Street
South Brooklyn Waterfront
98,650
$21,500,000
$217.94
The Treeline Companies / Long Wharf Real Estate Partners
195 Montague St.
(4 Office Condos)
Downtown Brooklyn
71,544
$29,500,000
$412.33
(49.9% Interest)*
* Purchasers assumed a substantial debt carry not included in the purchase price
Sale Price Price (p.s.f.)
$30,200,000
1,000,582 $240,000,000
N/A
$239.86
Greenpoint
RENTAL RATE: $60.00 p.s.f.
INVENTORY: 250,000 s.f.
L
Residential market with expanding commercial
inventory; significant forthcoming ground-up
development; tenants interested in live/work/play
potential.
East Williamsburg
Bushwick
Bridge
Williamsburg
J M Z
FLUSHING AVENUE
CORRIDOR
E
Queens
Brooklyn-
RENTAL RATE: $31.47 p.s.f.
INVENTORY: 4,960,638 s.f.
le
yrt
e
nu
e
Av
M
xpressw
Includes the Brooklyn Navy Yard and the
area alongside Flushing Avenue to the east;
represents enormous potential for future growth.
ay
F
Ma B
nh D
att N
an
Br Q
idg
e
Brook
Bedford-Stuyvesant
shin
Flu
lyn Bri
DUMBO
G
e
u
ven
gA
dge
Clinton Hill
ue
A C
RENTAL RATE: $62.42 p.s.f.
INVENTORY: 2,951,746 s.f.
n
Ave
ntic
Atla
Nostrand Avenue LIRR
Fort Greene
2 3
R
An amenity-driven location; resides at the top
of the market and offers the leading Brick and
Beam inventory.
DOWNTOWN BROOKLYN
RENTAL RATE: $45.96 p.s.f.
INVENTORY: 11,956,515 s.f.
Hu
gh
4 5
L.
Ca
rey
Tu
n
Cobble Hill
Boerum Hill
Prospect Heights
ne
l
Gowanus
Barclays Center/
Atlantic Terminal
Carroll
Gardens
Park Slope
Crown Heights
Fla
tbu
sh
Av
en
ue
Prospect Park
Features Traditional Office product; shaped by
the public transportation corridor running from
the Brooklyn Bridge to the Barclays Center.
South Slope
ay / 278
ATLANTIC AVENUE
CORRIDOR
Windsor
Terrace
Expressw
RENTAL RATE: $34.83 p.s.f.
INVENTORY: 857,500 s.f.
Gowanus
BRO O KLY N S UBMARKE TS
WILLIAMSBURG
Green-Wood Cemetery
A strong prospect for future growth; accessible
by public transportation and offers proximity to
neighborhoods with a strong employee base.
SOUTH BROOKLYN
WATERFRONT
Sunset Park
Borough Park
RENTAL RATE: $23.20 p.s.f.
INVENTORY: 11,733,573 s.f.
Led by Industry City; has an enormous volume
of Flex space with additional opportunity for
growth in Red Hook.
BRICK & BEAM
Repurposed industrial loft-style space with extensive
modern improvements.
Users: Creative companies & some financial services.
TRADITIONAL OFFICE
Steel and glass structures similar to those found
throughout Manhattan.
Users: Government-related, financial services & legal.
FLEX
Former industrial properties with some improvements.
Users: A wide range, from “makers” to loft office tenants.
© 2015 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from
sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
BR OWN S TONE BROOKLYN
Brownstone Brooklyn is comprised of roughly seven zip codes that best represent the local office-using employment base, including Boerum Hill, Clinton Hill, Cobble Hill,
Brooklyn Heights, Downtown Brooklyn, DUMBO, East Williamsburg, Fort Greene, Greenpoint, Park Slope, Prospect Heights, Vinegar Hill, and Williamsburg.
66.0% vs 65.5%
BROOKLYN’S
EDUCATED WORKFORCE
Percentage of population that have
earned a college degree
Brownstone Brooklyn
Manhattan
Brownstone Brooklyn’s population boom
Historical and projected housing units per ESRI
18%
26%
200,000
Housing unit
increase
Projected
housing
unit
from 2000
to 2000
2014to 2019
increase
from
Housing units
175,000
BROWNSTONE BROOKLYN’S
POPULATION BOOM
Historical and projected
housing units per ESRI
150,000
125,000
100,000
2000
2010
2014
2019 projected
Source: JLL Research
46.6% vs 46.9%
BROOKLYN’S WEALTH
PACES MANHATTAN
Percentage of population earning
at least $75,000 per year
Brownstone Brooklyn
Manhattan
Brooklyn vs. Manhattan population breakdown by age group
40.0%
Brownstone Brooklyn
Manhattan
34.1%
BROOKLYN VS MANHATTAN
POPULATION BREAKDOWN
BY AGE GROUP
Population percentage
30.0%
30.4%
22.2%
20.0%
21.4%
17.4%
14.2%
10.0%
0.0%
20 - 34
35 - 49
Age bracket
Source: JLL Research
50 - 64
2