Brooklyn Office Space Increases in Both Rent and Vacancy
Defying the law of supply and demand, Brooklyn office space is increasingly vacant, but the prices are going up, too. So says a second quarter report by real estate investment firm Marcus and Millichap, which the Observer made note of. We had more office vacancies in the middle of this year — 10.5 percent —…
Defying the law of supply and demand, Brooklyn office space is increasingly vacant, but the prices are going up, too. So says a second quarter report by real estate investment firm Marcus and Millichap, which the Observer made note of. We had more office vacancies in the middle of this year — 10.5 percent — than the middle of last year, 10.4 percent. And more vacancies are on the horizon, as some 2,000 Brooklyn office jobs are expected to disappear. Strangely, though, asking rents are up 5.1 percent since last year, to $27.58 per square foot on average. Weird.
Brooklyn Office Vacancy, Asking Rents Increase [Observer]
To office. Photo by gitachitarra.
The cause is that you still have alot of the “old” real estate agents that don’t want to look at the reality of the situation. The real estate agents are not making any money from selling and rentals because all the people that want to rent are not going to them because they ask for too much. Plus alot of homebuyers feel robbed.
Prices are up because of the reasons listed below. Before you read further, know that like residential sales statistics, averages can be quite misleading, though for different reasons in commercial.
1. Costs are way, way up to operate buildngs, mainly energy
2. Most of the cheap space in downtown Brooklyn and dumbo is gone. Used to be plenty of 16,18,20,22 dollar deals. Gone. Getting high teens in gowanus for unfinished space.
3. Quality of tenants up, more demanding, will pay more.
4. Several hundred thousand feet has been renovated in DB and Dumbo in the last 24 months. Costs more.
5. Inflation.
6. Manhattan, while off its recent peak, just went through the tightest natural* market its history.
7. Conversions of 166 Montague, 95 Willoughby and other smaller buildings to residential.
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* other tight ones were WWII years and dot-com. Neither
‘natural demand’. Former a war, latter phony it turned out.
Ditto, dittoburg. Asking rents, like asking home prices, lag.
It doesn’t defy the law of supply and demand until someone actually signs a lease for increased rent when the supply has simultaneously increased. At the moment it looks like brokers trying to bluff.