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REBNY Report: Brooklyn Retail Average Asking Rents Increase in 7 of 16 Prime Corridors in Summer 2018
November 28, 2018
Retail market trends remain favorable in neighborhoods with growing residential density
Average asking rents for available ground floor retail spaces increased year-over-year in seven of the 16 top Brooklyn retail corridors analyzed in the Real Estate Board of New York’s (REBNY) Summer 2018 Brooklyn Retail Report. Areas experiencing growth in residential development saw increases in average asking rents for ground floor retail space.
REBNY’s Brooklyn Retail Report Advisory Group observed that declines in average asking rents occurred mostly in more mature neighborhoods where retail rents soared after the financial crisis. Those rents are now adjusting downward as smaller property owners become more realistic about the condition of their spaces and their current value. Declines in average asking rents were recorded in eight of the 16 Brooklyn corridors. The average asking rent for Greenpoint’s Franklin Street, between Meserole Avenue and Commercial Street, remained unchanged.
“Brooklyn continues to attract and maintain retailers as the New York City retail market has been increasingly responsive to the shifting retail market environment,” said John H. Banks, REBNY President. “The demand for high value retail spaces in the borough’s most popular corridors and increased residential density in surrounding neighborhoods have contributed to Brooklyn’s favorable conditions for a wide range of retail concepts.”
Average asking rents per square foot (psf) increased in three of the five Williamsburg corridors surveyed during the summer of 2018, compared to the summer of 2017. The average asking rent on North 6th Street, between Driggs Avenue and Kent Avenue, was $251 psf, an eight percent increase year-over-year. The average asking rent on North 4th Street, between Driggs Avenue and Kent Avenue, was $197 psf, a 34 percent increase from the summer of 2017. This large increase was attributable to a combination of existing retail spaces becoming available closer to Bedford Avenue and larger, newly renovated spaces becoming available further west on the corridor.
Meanwhile, Bedford Avenue average asking rents, between Grand Street and North 8th Street, fell by 11 percent to $351 psf compared to last year. Above North 8th Street and up to North 12th Street, the average asking rent on Bedford Avenue increased three percent to $168 psf. Despite the upcoming interruption of L train service, asking rents on these corridors have been relatively stable.
ADDITIONAL HIGHLIGHTS FROM REBNY’S SUMMER 2018 BROOKLYN RETAIL REPORT
– Flatbush Avenue in Prospect Heights, between 5th Avenue and Grand Army Plaza, recorded another average asking rent increase this period compared to last year. The $118 psf average was a nine percent increase when compared to the summer of 2017. This marked the third consecutive year-over-year increase on the corridor. Growing foot traffic in the area—generated by new, high-density residential projects, popular restaurants, and a strong office leasing market—contributed to this upward trend.
– The average asking rents for ground floor retail space in Cobble Hill declined sharply in the summer of 2018 when compared to the summer of 2017. The average asking rent on Court Street, between Atlantic Avenue and Carroll Street, decreased 31 percent year-over-year to $103 psf. On Smith Street, between Atlantic Avenue and Carroll Street, the average asking rent fell 32 percent year-over-year to $101 psf. In the past year, higher-value spaces on these corridors were leased while lower-value, smaller spaces became available, both of which contributed to the drop in average asking rents.
– The same phenomenon occurred in Brooklyn Heights on Montague Street, between Hicks Street and Cadman Plaza, where rents fell 27 percent to $110 psf. This decline was due to turnover of higher-priced spaces. REBNY’s Brooklyn Retail Report Advisory Group noted that low availability is common on this corridor so any absorption or new supply has a strong effect on its average asking rent.