CRE Execs Bullish on Brooklyn Office

NEW YORK CITY—A staggering 74% of commercial real estate executives foresee continued office space growth in Brooklyn, according a new survey.

Looking at a corporate upsurge—including JP Morgan's planned move of 2000 employees to Brooklyn—survey respondents attest, "Brooklyn will be a serious contender for New York City office space in the coming years."

But a notable number, 16%, don't feel that way. They predict that growth will soon stagnate, asserting "Brooklyn won't be able to expand its market for Class A office space."

Those are among the results of the Fall 2014 Gotham Commercial Real Estate Monitor survey by accounting firm Marks Paneth. Responding were 124 top-level real estate executives, including owners, brokers, agents, engineers, accountants and lawyers specializing in the commercial space.

"While confidence isn't universal, the vast majority of professionals see Brooklyn as a growth opportunity," says William Jennings, partner-in-charge of the real estate group at Marks Paneth.

Technology is expected to play a major role in the borough's fortunes. The survey shows a surge in optimism that the Brooklyn Navy Yard will become a tech center. The Navy Yard was called the "next hot neighborhood" for commercial leasing to technology businesses by 29% of real estate executives. That's a 13-point increase over the Summer 2014 survey.

Optimism for the Navy Yard as a technology center has placed it ahead of all other neighborhoods as a tech hotspot: In the survey, it has outstripped the previous favorite, Long Island City, which gets the vote of 25% of the executives. There's also a groundswell in favor of Downtown Brooklyn—4 %t say it's the next hot tech neighborhood, up eight points (more than double) from June.

What major project do executives think will have the biggest positive impact on property values in its neighborhood? It isn't One World Trade Center.

The Hudson Yards will have the most positive long term-impact, say 39 %t of professionals. The Second Avenue Subway ranked just behind, at 30%, followed by the Long Island Rail Road access to Grand Central Station, at 24%.

By contrast, the One World Trade Center barely registered. Only 7% think the new World Trade Center tower will have the most positive long-term impact on commercial property values in its neighborhood.

A total of 124 professionals participated in the survey, including owners and managers of commercial property, commercial real estate brokers and agents, attorneys, accountants and other professionals specializing in the sector.