Brooklyn On the Ropes

How fares the office market in America’s fourth-largest city? Not good. Leasing activity in Brooklyn was down significantly in the third quarter, though asking rents did tick upward. All in all, the borough still lags far behind its pre-pandemic numbers. Meanwhile, on the other side of the East River, an office tower just went for a quarter of a billion-plus.

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— Tom Acitelli, Co-Deputy Editor

Brooklyn Office Leasing Declines Even as Asking Rents Tick Upward

After a slow recovery this year, Brooklyn’s office market struggled in the third quarter, with leasing activity dipping 30 percent, according to Colliers’ latest market report. The amount of office space leased slid from 380,751 square feet last quarter to 265,132 square feet in the third quarter of 2022. However, tenants have still leased 41 percent more space this year compared to this time last year. The largest deals closed in Kings County in the third quarter included 72,000 square feet with marketing firm Huge at Dock 72, 27,000 square feet with Highline Commerce in Industry City, and a 19,000-square-foot expansion by the federal General Services Administration at 100 Myrtle Avenue in Downtown Brooklyn. The average Brooklyn office asking rent rose 3 percent to $52 a square foot compared to last quarter, and it’s up 7 percent, to $48 a square foot, from one year ago.

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Former AIG HQ at 175 Water Street Sells for $252M

Vanbarton Group has officially sold the 31-story office tower at 175 Water Street for $252 million, Commercial Observer has learned. The building, which previously served as AIG’s headquarters, was purchased by 99c LLC, a real estate investment firm that specializes in prime office, hospitality and manufacturing assets. 99c purchased the asset in an all-cash deal, sources said, while JLL marketed the sale on behalf of Vanbarton Group. The firm’s plans for the Seaport District property couldn’t be confirmed, but, seeing as 175 Water Street is currently fully vacant, myriad repositioning opportunities are possible.

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