After a five-year slump, the Brooklyn office market is beginning to rebound — and school tenants are behind some of the biggest deals.
Landlords in the borough leased 570,000 square feet of offices last quarter, four times the prior period and one of the best three-month spans since the pandemic, Bisnow reported, citing figures from Colliers.
Education has led the way, with four of the five largest leases signed by schools.
Brooklyn Prospect Charter School leased more than 150,000 square feet at The Wheeler, Tishman Speyer’s 10-story tower at 181 Livingston Street. It was Brooklyn’s largest lease since the third quarter of 2023.
“What developers are working on is an investment in the existing community,” Jake Cinti, a senior vice president at locally based Open Impact Real Estate, told Bisnow. “It’s a reason why we’ve been able to get a huge amount of transactions done in some of the [Class-B] buildings.”
Schools may not be what landlords imagine for new Class-A office buildings, but for a borough with a population surge, such essential services are much-needed, brokers say.
Brooklyn added nearly 25,000 residents, boosting the population by 1 percent between July 2023 and last year, according to the New York City Department of City Planning.
Renting to schools, however, can be costly for landlords. The reason: they require substantial build-out, according to Shlomi Bagdadi, founder of locally based Tri State Commercial Realty.
At the same time, tenant improvements are often included in the rent, bringing it up to what a traditional tenant might have paid.
“If a space that was an education facility goes to the market, it’s going to be filled in no time,” Bagdadi told Bisnow, adding that his firm just closed three charter school deals in Brooklyn. “Before we even start marketing it, it’s being absorbed.”
Last year, Industry City signed 333,000 square feet of leases at its 6-million-square-foot waterfront campus at 220 36th Street in Sunset Park. That’s a 5.7 percent year-over-year jump, with another 70,000 square feet inked last quarter, according to the report.
The campus is now home to such community-focused tenants Fundraise Up, The Marcy Lab School, Blankets of Hope, NYU Langone and the Brooklyn Chamber of Commerce.
Tech, media and advertising firms once flocked to Brooklyn. Though tenants have reentered the Manhattan market, it’s been much slower in Brooklyn, where the office availability rate is 21 percent, with 10.3 million square feet.
Manhattan’s availability, by comparison, was at 16 percent last quarter, from 18 percent in the prior period, according to Colliers.
“Unless the CEO lives in Brooklyn and lives near where the office is going to be, there’s not a lot of interest in Brooklyn,” Ruth Colp-Haber, CEO of Wharton Property Advisors, based in Manhattan, told Bisnow.
— Dana Bartholomew
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