Brooklyn is getting traction as creative brands once again start to take advantage of lower rents and city tax incentives.
According to CBRE’s 2019 second quarter report, tenants migrating from Manhattan represented 17 percent of Brooklyn’s total leasing activity of 599,000 square feet. But there is so much new space — over 4 million square feet in 13 renovations now available or coming on the market — that leasing can’t keep up.
In one of the borough’s largest deals for private office space this year, branding agency thelab will be moving from Chelsea to 42,452 square feet of space at Normandy Real Estate Advisors’ renovation of 175 Pearl St. in Dumbo Heights.
In a smaller deal, the Stockholm-based design firm Doberman is moving from 333 Park Ave. So. to The Breeze, a colorfully repositioned former warehouse at 315 Meserole St. in East Williamsburg.
Meserole expanded from roughly 4,000 square feet to 6,890 square feet on the ground floor of a building where asking rents are in the high-$30s to low-$40s per square foot — far below Manhattan’s roughly $80.56-per-square-foot average rent. It’s also eligible for city incentives.
The Breeze’s 100,000-square-foot renovation by the Hudson Cos. will include a rooftop bar and club run by the owners of the Lavender Lake bar in Gowanus. Its ground floor also will host other restaurants, as well as the first Ethel’s Club – a networking and wellness club for women of color in 4,570 square feet.
The building is also just a few blocks from Netflix’s upcoming 160,779-square-foot office and studio complex at 333 Johnson Ave. where Normandy is one of the investors.
Elizabeth Juviler of Rice & Associates represented Doberman, whose clients include Oscar, Google, Pearson, Ikea, Volvo, Spotify and MoMA.
Ben Waller of ABS Partners Real Estate represented the Hudson Cos.
In Dumbo Heights, thelab’s new digs will include a newly constructed rooftop penthouse and private landscaped outdoor space. Thelab’s space on the top three floors will include 13,647 square feet on the seventh floor, the entire 27,197-square-foot eighth floor and a 1,608-square-foot “floating” penthouse with kitchen facilities.
The company, which works with labels like Michael Kors and Brooklinen, enjoyed a similar set-up at the top of the Terminal Stores along the Hudson River in Chelsea.
“This was something that caught their attention right from the start,” said Adam Henick of Current Real Estate Advisors, who represented thelab along with his co-founder Brandon Charnas. “We presented them with an opportunity to move to Dumbo and take advantage of city programs in a place where their company can thrive.”
The city programs include the Relocation and Employment Assistance Program, known as REAP, which provides tax credits for every employee moved into the boroughs and Upper Manhattan.
“Every tenant considering moving from Manhattan to Brooklyn is trying to take advantage of the incentives and is a big part of their calculus,” said Neil King, a vice chairman of CBRE.
King and Paul Amrich of CBRE represented Normandy in the 15-year lease, which had an asking rent of $65 per square foot and does not count the outdoor feet.
The 211,000-square-foot building is also undergoing a renovation.Earlier this year, it signed a 62,000-square-foot lease for Luxembourg-based co-working outfit Spaces, which will have its own entrance.
In other Brooklyn deals, in April Between the Bricks reported the largest private Brooklyn office deal in months — at 83,000 square feet — as Rent the Runway will move to 10 Jay St., also with private outdoor space.