Boom in downtown Brooklyn shows no signs of letting up

Real Estate Weekly, Oct 25, 2000 by James Whelan

In the last 15 years, New York City has witnessed several pivotal transformations in the commercial real estate market: the rebirth of Times Square as a commercial and entertainment destination; the resurgence of Lower Manhattan as an anchor for financial service and high-tech firms; and the emergence of a prime office market in Downtown Brooklyn.

The emergence of the primary office market in Downtown Brooklyn has its roots in the creation of Pierrepont Plaza in 1988, followed by the creation of MetroTech Center, which today is a 16-acre, seven building complex with 6 million square feet of occupied Class A office space. The district has lured such high-profile corporate tenants as Goldman Sachs, Morgan Stanley Dean Witter, Chase Manhattan Bank, KeySpan Energy, Verizon and Bear Stearns, which share the neighborhood with cultural and academic institutions.

Major successes were realized in 1998 with the completion of the New York Marriott Brooklyn -- the first new hotel built in Brooklyn in almost 70 years, and Renaissance Plaza -- a 32-story office and retail development. The creation of the prime office market has coincided with the dramatic rise in popularity of the nearby brownstone neighborhoods. According to the Corcoran Group, in the past year, average condo prices in Brooklyn Heights increased by 83%, while prices for single-family homes in Boerum Hill jumped 50% and prices for 2-4 family homes in Fort Greene increased by a staggering 125%.

The boom is not limited to commercial and residential space, however. Downtown Brooklyn is also benefiting from current capital improvements undertaken by a host of academic and medical institutions. Polytechnic University, located at MetroTech Center, is in the midst of a $100 million campus upgrade, which will include a 16-story dormitory, a 62,000 square foot academic and athletic building, and a $32 million renovation of its existing facilities. In December, LIU's Pratt Building, located on Flatbush Avenue Extension, will open a new six-story, 68,150 square foot building that will provide new facilities for the School of Education as well as a centralized location for student support services.

Brooklyn Hospital is spending $100 million over the next two years to renovate and improve its Downtown campus. The investment will support renovations to its existing capital plant, installation of new equipment, expansion of services, and reconfiguration of its entire facility to better accommodate patients and visitors.

The public sector is also investing in Downtown Brooklyn. A new $222 million, 14-story courthouse is being constructed on Adams Street. Across the street, the General Post Office is undergoing a $161 million renovation. Both are scheduled for summer 2002 completion and will serve the U.S. Eastern District of New York, the U.S. Bankruptcy Court, and other court related agencies.

Looking to the future, a number of important projects have either been announced or are being considered. Given the strong demand for office space and with vacancy rates at all-time lows, there is a high level of enthusiasm for these' initiatives. Perhaps the most notable is Nine MetroTech South, which is the last development site at MetroTech. When completed, it will provide 750,000 square feet of new Class A office space as well as state-of-the-art telecommunications infrastructure and parking. Its building design emphasizes efficiency and flexibility, and is being marketed to telecommunications and high-tech tenants.

In addition, the New York Marriott Brooklyn has announced its intention to build a 22-story annex with 280 rooms at the site of a current parking garage located across the promenade connecting Jay and Adams Streets. The annex will be attached to the existing 376-room hotel through a sky bridge. Recent reports also indicate that the New York City Transit Authority may vacate its building at 370 Jay Street. If so, the space would be an ideal site for a variety of commercial, educational or mixed-use developments.

At the same time, plans are moving forward for the Brooklyn Academy of Music (BAM) Cultural District, a vibrant 24-hour cultural district around BAM. The effort is off to an auspicious start with the opening of the new headquarters for the Mark Morris Dance Company this winter. The local development corporation which is coordinating the effort plans to lure additional cultural institutions to the area as well as to pursue ideas such as the creation of a visual and performing arts library, a charter school, a new-media center, an arts complex, theaters, a museum, retail space, loft housing and a hotel. New York City already has pledged $25 million to the project.

Perhaps the best indicator of any district's vitality is the amount and breadth of investment it receives. As evidenced by recent, overwhelming financial commitments from the private and public sectors as well as academic, cultural and educational institutions, Downtown Brooklyn and its environs are thriving as never before. In doing so, the area has distinguished itself as a great place to live, work and learn.