NEW YORK CITY—An explosion in population growth, particularly among Millennials, and the emergence as an incubator for retail “chic” has transformed Brooklyn from what had been New York’s least glamorous borough into a region known worldwide for global retail brand cache.
In its latest report entitled “Brooklyn: The Epicenter of Hip. How Millennial Consumers Created the Model for Urban Cool,” Cushman & Wakefield states that a host of factors have fostered this transformation that began in 2009, due in large part to the migration of Millennials to the borough.
“For the retail world, Brooklyn has emerged as an incubator of sorts,” says report author Garrick Brown, VP, retail research for the Americas. “While local residents may just think of them as neighborhood boutiques, a slew of independent merchants have been instrumental in creating a unique mix of funky and chic known as ‘Brooklyn Style.’” He notes that retailers such as Apotheke, Bird, Concrete + Water, Home of the Brave, Life Curated, Sincerely Tommy, Swords-Smith, Wolves Within and others have been instrumental in lifting Brooklyn’s image as a hip retail mecca.
Brooklyn’s overall population has grown by about 8% in the past 15 years to approximately 2.7 million inhabitants. However, driving the retail sector is the explosive growth in the Millennial (ages 25-34) population in Kings County, up by more than 19.5% since 2000. Comparatively, Millennial population growth is 8.4% nationwide.
Another key driver is business growth. Between 2009 and 2014, Brooklyn netted approximately 1,900 new businesses each year, according to figures supplied by the Brooklyn Chamber of Commerce. The new businesses that opened their doors in Brooklyn during that period were considerably higher than the approximately 900 new firms on average each year that started operations from 2000 to 2009.
‘The wave of independent retailers that have emerged and thrived has been the source of Brooklyn’s sudden global cache,” Brown states. “The borough has become a hub of artisanal production whether it is high quality food, apparel, home goods or other products.”
He notes that Brooklyn is by far the top location in New York State or distilleries. According to the report, Brooklyn boasts at least 15 licensed distilleries, easily besting second place Buffalo, which has five.
C&W’s Brown says that Millennials are already transforming Williamsburg to an upscale hip neighborhood, and Downtown and Dumbo are now also seeing a renewal thanks to the influx of educated residents over 20-years of age. Areas such as Red Hook and Flatbush are just beginning to see renewal driven by the Millennials.
While the borough is known for its unique boutique shops, it is the national retailers that are driving growth there. At the end of the third quarter of 2015, the retail vacancy rate stood at just 3.4% and was trending lower, according to figures supplied by the CoStar Group. In fact, the vacancy rate has fallen steadily in each of the past three years. Average asking rent for all types of retail space in the borough stood at $44.57-a-square-foot on an annual triple-net basis, which was 6.2% higher than 12 months earlier.
The population growth in Brooklyn has also impacted the multifamily market, Brown reports. At the end of the third quarter of 2015, Brooklyn’s apartment vacancy rate stood at 6.1%, up from 5.0% a year earlier.
In total, C&W says that there are more than 6,700 market rate units under construction at the moment in Brooklyn, with the Dumbo/Downtown market leading all other neighborhoods with more than 3,000 units in the pipeline.
“Brooklyn continues to attract residents of Manhattan with its generally cheaper rents, but the real driving force behind multifamily demand in the borough continues to be the Millennials seeking urban lifestyles in a 24/7 work/play environment,” Brown says. “We don’t see that ending anytime soon.”