Brooklyn Office Insights: Discover the Trends Driving the Market Forward

Brooklyn Office Market Overview – Key Insights from the Latest Report

Brooklyn’s office market continues to evolve, offering a dynamic landscape for tenants, landlords, and investors. Here are the key takeaways from the latest market report, shedding light on trends and opportunities shaping the borough’s commercial real estate sector..

Market Overview

Inventory Growth

• Total Inventory: Brooklyn’s office market has grown to 25M square feet, showing a slight increase of 0.8%compared to the previous period.
• Construction: Currently, 326K square feet are under construction, marking a 35.6% decline from earlier figures. This drop signals reduced development activity as the market adjusts to existing supply and demand.

Vacancy Rates

• The vacancy rate stands at 8.4%, a slight decrease of 0.3%, indicating steady demand for existing spaces.

Net Absorption

• A notable shift in tenant activity, with 250K square feet absorbed over the past 12 months—an astonishing 1,835% increase compared to the previous period. This highlights growing interest in Brooklyn’s office spaces.

Rental and Sale Metrics

Asking Rents

• The average market asking rent is $43.40/SF, reflecting a 1.2% increase from prior figures.
• Sublet Asking Rent: Slightly lower at $42.39/SF, providing cost-competitive options for tenants seeking flexibility.

Sale Prices

• The average market sale price per square foot has dropped to $347, down 5%, potentially signaling opportunities for buyers.
• Discounts: Properties are completing sales at an average 16.6% discount compared to asking prices.

Demand and Leasing Trends

Leasing Activity

• Over 729K square feet were leased in the past year, reflecting consistent demand from a variety of tenants.
• Leasing Duration: On average, properties take about 6 months to secure tenants.

Occupancy

• The overall occupancy rate is 91.6%, demonstrating a healthy balance between available and occupied spaces.

Development and Availability

Construction Deliveries

• In the past year, 238K square feet of new office space were delivered, with projects averaging 31.4K square feetin size.
• These newly developed properties reported 84.4% occupancy at delivery, signaling strong pre-leasing demand.

Available Space

• Total available space in Brooklyn’s office market amounts to 2.4M square feet, of which 2.1M square feet are currently vacant.

Investment Insights

Sales Volume

• Over the past year, Brooklyn office properties generated $266M in sales volume across 50 properties.
• The current average cap rate stands at 7.3%, reflecting a 0.3% increase from prior levels.

For Sale Inventory

• Currently, 768K square feet are listed for sale, with an average asking price of $422/SF, slightly above recent sale averages.

Key Takeaways

1. Leasing Activity Surging: The sharp rise in net absorption (250K square feet) signals strong tenant interest, driven by competitive rents and improved occupancy rates.
2. Buyers' Market Signals: Declining sale prices and a 16.6% sale-to-asking price differential present lucrative opportunities for investors.
3. Development Slowdown: The 35.6% drop in under-construction space suggests caution among developers, creating opportunities for adaptive reuse and value-driven projects.
4. Sublease Opportunity: Competitive sublease rents at $42.39/SF offer cost-effective solutions for startups and growing businesses.

Brooklyn’s office market is a vibrant mix of opportunity and challenge, offering significant potential for growth in both leasing and investment. Whether you’re looking to lease, buy, or invest, now might be the perfect time to explore Brooklyn’s evolving commercial real estate landscape.

With close to 1,000 office leases signed throughout my career, I bring unmatched expertise and dedication to every client, whether you’re leasing office space, buying or selling an office building. If you or anyone you know needs assistance in these areas, I’d be honored to help! With more than a decade of experience in real estate, I’m proud to be a trusted expert specializing in Brooklyn and Manhattan markets. Let’s work together to achieve your office real estate goals!

David Ratner at Douglas Elliman

?? [email protected] | ?? 347-501-0860

https://link.me/daveratnernyc

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