March 7, 2007
Downtown Brooklyn office vacancy rises
Landlords seek to fill empty spaces with smaller, hipper companies
The Real Deal
By Michael Rudnick
As the largest owner of Class A office space in Brooklyn, here's Bruce Ratner's latest headache:
Brooklyn's biggest office complex, the MetroTech Center, has historically been largely populated by the back offices of investment banks, insurance companies and other financial institutions. Many of these tenants have recently pulled up stakes, creating sizable vacancies in hundreds of thousands of square feet of Class A space.
And here's the spin:
The relatively new availability of large blocks of Class A office space in Downtown Brooklyn -- as well as low rents compared to Manhattan -- could help stimulate business migration to the borough.
Forest City Ratner Executive VP Jim Stuckey (also President of the Atlantic Yards Development Group) offers super spin:
"What is different now in Brooklyn is that it has become a forward-thinking, hip, cool, place to be -- the idea that it is for back office only is antiquated," he added.
NoLandGrab: Oh yeah, the "creative industries" are really looking to move to "forward-thinking, hip, cool" Metrotech.
The article gets the facts seriously muddled when it considers the implications of adding more office space to the market with Atlantic Yards. Norman Oder already "overkilled" it on his blog Atlantic Yards Report (link), but here's the gist of it:
The project -- made possible by the
2004 Downtown Brooklyn rezoning for commercial, residential and academic developmentState's approval of Atlantic Yards in December, 2006 -- will have between 600,000 and 1.8 million square feeteither 336,000 sf or 1,606,000 sf of office space, more than 6,400 units of affordablehousing [2250 "affordable" rentals], a sports and entertainment arena and more than 400,000 square feet of hotel and retail space.
Hmm... sort of makes you wonder about the other "facts" in the article.
The market for starchitect-designed luxury condos selling at a premium price tag hasn't materialized as developers had hoped; the market for Class A office space in Manhattan tanked and then rebounded in the wake of 9-11; and the development spawned by the Downtown Brooklyn plan which was supposed to bring a mix of office and housing consists primarily of luxury condos (proof that there isn't demand for MORE Class A office space in Brooklyn). All of these factors betray the uncertainty that Brooklyn needs, much less wants, Atlantic Yards.
Laurie Olin spoke to this point in his interview with The NY Observer. The landscape designer for Atlantic Yards asked, "How long does it take the market to absorb that much stuff?"
Posted by lumi at March 7, 2007 8:41 AM