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November 5, 2008
Ad agency defects to Brooklyn
Crain's NY Business
A year and a half ago, Forest City Ratner and the Downtown Brooklyn Partnership began marketing MetroTech to the creative services industry.
Ratner has recently made some strides with some very helpful tax credits:
Advertising agency UniWorld Group Inc. is leaving Manhattan for Brooklyn, drawn by the borough’s cheaper rents and easy commute for its employees.
UniWorld, which is part of the WPP Group, inked a 10-year deal for 37,000 square feet at 1 MetroTech Center. The asking rent for the deal, which encompasses the entire 11th floor, was in the low $40s a square foot. However, a city program provides tax credits of up to $3,000 per employee for companies that relocate from Manhattan to downtown Brooklyn. That credit will knock around $12 a square foot off the rent, according to Joe Chan, president of the Downtown Brooklyn Partnership.
The tax credit drove the asking rent below $30 a square foot. Such low rents cannot be found in Class A Manhattan office towers, notes UniWorld’s broker, Shawna Menifee of Cushman & Wakefield Inc.
The NY Times, Office Tenants Flee Manhattan Rents for Brooklyn
At least nine Manhattan companies, including UniWorld, have signed new leases for Class A space in Downtown Brooklyn this year. The leases — for properties ranging in size from 4,000 square feet to 120,000 square feet — total nearly 300,000 square feet.
Although that would not make much of a dent in Midtown Manhattan, the Downtown Brooklyn market is relatively small. It has only about eight million square feet of Class A space, compared to nearly 180 million square feet in Midtown.
...
MaryAnne Gilmartin, executive vice president for commercial and residential development at Forest City Ratner, said the project would add up to one million square feet of office space, including a 600,000-square-foot tower. In addition, the company says it has the capacity to add almost one million square feet of office space in the MetroTech development.“If we build one, that doesn’t mean we wouldn’t build the other,” Ms. Gilmartin said.
But Ms. Gilmartin said Forest City Ratner would not build any new office space in Brooklyn until it had adequate advance leasing. She said that before the credit markets froze up this fall, the banks could finance buildings with 50 percent advance leasing. Although it is too soon to say what might happen once the credit markets thaw, she speculated that bankers might want greater advance leasing, perhaps as much as 60 to 75 percent.
So the office market in Downtown Brooklyn might remain tight for some time. There is some sublease space on the market; and JPMorgan Chase is looking to rent out a large block of space in its buildings in MetroTech. But Ms. Gilmartin said that 99 percent of Forest City Ratner’s space in MetroTech is leased. “We are sitting pretty now,” she said.
NoLandGrab: Something tells us that Forest City Ratner wouldn't be "sitting pretty" if every commercial building was subsidized to the same extent as MetroTech.
Posted by lumi at November 5, 2008 5:59 AM