WeWork and Other Firms Test Brooklyn's Office Market
August 21 2017 - 12:23AM
Dow Jones News
By Keiko Morris
Samuel Rudin, the late patriarch of one New York's oldest real
estate dynasties, built the family's real estate portfolio with a
rule: if a property wasn't accessible by subway, he wasn't
interested.
Now the Rudin family is tweaking that rule, adding another mode
of transportation -- a ferryboat.
The Rudin family and office giant Boston Properties Inc. are in
the midst of building a 675,000 square-foot office building on the
Brooklyn Navy Yard's waterfront. Called Dock 72, the building
stretches along a finger of land near working dry docks on the East
River. Its riverfront doorstep will serve as the seconda stop on a
ferry route from lower Manhattan.
The Rudin family now is saying "if you can't get there by subway
and ferry, we don't want to own it," according to Bill Rudin,
Samuel Rudin's grandson and chief executive of Rudin Management
Co., the operating arm of the Rudin family's holdings. "People's
commutation has totally changed."
Dock 72 -- anchored by a 220,000-square-foot lease with global
co-working firm WeWork Cos. -- is part of a development surge in
Brooklyn's emerging office market, where more than 3 million square
feet of space is under construction. The project is one of several,
including a 500,000 square-foot mixed-use development in
Williamsburg, that industry executives are watching to see if
enough appetite for office space exists from both homegrown
Brooklyn companies and larger Manhattan firms. Dock 72 is expected
to open next summer, with space ready for tenants to build out in
the winter of next year.
In the second quarter of this year, Brooklyn office leasing
reached 661,157 square feet, a 36% increase from the same period in
2016, according to a report from Cushman & Wakefield.
A report from real estate services firm JLL noted, however, that
larger lease deals will be necessary in the coming quartersto
support the existing development pipeline. Many of the high-profile
lease deals completed in Brooklyn over the last two years have been
under 100,000 square feet.
"You haven't had that big pop to establish Brooklyn as its own
office market, as opposed to a complement of Manhattan as a primary
market," said Gabe Marans, corporate managing director at real
estate service firm Savills Studley. "But I think it will happen.
It's just a matter of time."
WeWork's co-working space is expected to bring small
entrepreneurs that could expand into larger spaces in the building,
Mr. Rudin said. At the same time, the team expects the project to
draw a mixture of small businesses and larger companies, some
native to the borough and others from outside looking to rebrand
themselves, he said.
Connecticut-based United Technologies Corp. is one example of an
outside firm looking to plant a flag in Brooklyn, Mr. Rudin noted.
The company, which provides high-technology systems for the
building and aerospace industries, announced earlier this year that
it planned to hire 250 people to work and focus on innovation at
the Empire Stores redevelopment in the Dumbo section of
Brooklyn.
The Brooklyn Navy Yard's main mission is to create a modern
manufacturing hub and generate those types of jobs for the
surrounding communities. WeWork's presence is part of the yard's
commitment to supporting small businesses, said David Ehrenberg,
president of the Brooklyn Navy Yard Development Corp. He also
envisions Dock 72 could bring in technology, design and
architecture firms that could create a more diverse business
environment and feed off business from other companies in the
yard.
"That diversity has made New York so amazing, and it's harder
and harder to find in New York," Mr. Ehrenberg said.
The location is considered by some to be
transportation-challenged, with the closest subway stop about a
15-minute walk. But the development team noted the project has a
number of options. Ferry service offers connections from Manhattan
as well as other points in Brooklyn. The Navy Yard itself has
shuttles to and from train stations. And the building, which also
will offer valet bike parking and car parking, will have a Citi
Bike docking station just outside.
Dock 72's design taps into the yard's industrial history aims to
capture a creative vibe seen as Brooklyn's calling card.
The 16-story building's long, linear structure evokes the large
ships and maritime history of the Brooklyn Navy Yard. V-shaped
support beams on the bottom floors give the building an industrial
feel. Corridors uninterrupted by columns run 550 feet long on
either side of the structure's central core. S9 Architecture and
Engineering PC was the design architect and Perkins Eastman the
managing architect for the project.
The project features a 10,000 square-foot recreation space that
can be used for events and concerts. The building, designed with
input from WeWork, will be filled with amenities, including a
basketball court, a gym with treatment rooms, areas for food and
dining, plentiful informal lounge areas and 18,000 square feet of
terraces.
"It's all about attracting and retaining employees," Mr. Rudin
said. "That's why we're creating this environment."
Write to Keiko Morris at Keiko.Morris@wsj.com
(END) Dow Jones Newswires
August 21, 2017 00:08 ET (04:08 GMT)
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