New projects by premier developers will add millions of square feet to rapidly transforming Waterfront area
JLL reports that Brooklyn and Long Island City are positioned for a rapid transformation, with 10.5 million square feet and 2.4 million square feet of office space in the pipeline in each market, respectively. In its most recent commercial real estate market report, the company has merged the booming Brooklyn and Long Island City markets due to increasing symmetries between the areas as potential tenants increasingly consider options throughout the Waterfront area.
“We are seeing, and will continue to see, the Waterfront areas of Brooklyn and Long Island City transform rapidly,” said Michael Shenot, Managing Directorwith JLL. “It is striking to see how areas outside of the established Downtown Brooklyn submarket, such as the Flushing Avenue Corridor, have transitioned into a viable office market in just the past few years. Renowned developers have aimed to provide a market that is rich in talent between the ages of 25 and 45 and desirable amenities with a true live, work, play environment. The Brooklyn and Long Island City Waterfront also offers considerably cheaper rents compared with competitive markets in Manhattan, especially after incentives are taken into account. With all of these factors in mind, I expect a marquee Manhattan-based company to make the move across the river, which will only intensify the area’s growth.”
Sizable creative firms continued to be active in Brooklyn to begin the year, with two making a move from the pricier Midtown South Manhattan market. 72andSunny relocated to the Empire Stores (55 Water Street) redevelopment project in Dumbo from 30 Cooper Square, taking 42,249 square feet. Also moving from Midtown South was online magazine Slate,which subleased 21,395 square feet at 15 Metrotech Center. Additionally, mobile marketing company Prolific Interactive agreed to lease 18,807 square feet at 77 Sands Street (Dumbo Heights), representing a move within the Dumbo submarket.
Greenland Forest City announced plans for what could become the largest traditional office building in the Outer Boroughs, a 1.5-million-square-foot office tower at 590 Atlantic Avenue in Downtown Brooklyn. The development necessitates the reallocation of 650,000 square feet of air rights from the adjacent Barclays Center Plaza.
Similar to Brooklyn, Long Island City is also seeing a development boom. Tishman Speyer is reportedly seeking EB-5 financing for 1 Gotham Center and 3 Gotham Center, which, when combined, would add 1.1 million square feet to the market.It is worth noting that 3 Gotham Center has a 258,000-square-foot commitment by WeWork to anchor the building. Elsewhere in Long Island City, 37-47 Austell Place, purchased in 2015 by Normandy Real Estate Partners, Drake Real Estate Partners, and GEM Realty, will be transformed from industrial into loft office space. The 180,000-square-foot redevelopment project is expected to be delivered by late 2017.
In addition to the current developments, the Brooklyn and Long Island City development pipeline is primed to expand with several purchases in the works. The largest among these is the iconic 733,000-square-foot Watchtower Building at 25-30 Columbia Heights. The Jehovah’s Witnesses building is currently under contract for purchase, along with a 1.1-million-square-foot development site at 85 Jay Street, by Kushner Companies, RFR Realty and LIVWRK for $700 million. Also in Brooklyn, RXR Realty and Westbrook Partners closed on a $161-million purchase of 47 Hall Street in the Flushing Avenue Corridor with plans to repurpose the full block of industrial buildings into approximately 700,000 square feet of commercial space.
In Long Island City, GreenOak and The Related Companies acquired two industrial assets for a total of $110 million. The firms plan to convert the 163,987-square-foot Blanchard Building (21-09 Borden Avenue), and the 102,600-square-foot Paragon Oil Building (21-00 49th Avenue), into office space, with an expected delivery by year-end 2017.
JLL is a leader in the New York tri-state commercial real estate market, with more than 2,300 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2015, the New York tri-state team completed approximately 32.6 million square feet of lease transactions; arranged investment sales, notes, debt and equity transactions valued at more than $8.2 billion; managed projects valued at $7.8 billion; and oversaw a property management, facilities management and agency leasing portfolio exceeding 141 million square feet.
About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $58.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
