Bushwick takes next steps with a commercial upturn

June 3, 2016 By Daniel Tropp, Vice President From Ariel Property Advisors

Daniel Tropp, photo courtesy of Ariel Property Advisors

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Following on the heels of a residential boom that pushed its population to an all-time high of 147,840 in 2015, Bushwick is in the midst of a commercial renaissance. Bushwick’s growth trajectory is similar to what was observed in Williamsburg and Long Island City. An influx of new residents drawn to the neighborhood’s convenient transportation and attractive price points is now demanding more local amenities, services and job opportunities. This is driving up demand and prices for a variety of commercial and mixed-use assets.

Since 2014, 50 mixed-use properties have traded hands in Bushwick and prices have climbed steadily. In that two-year time frame, the average price per square foot for mixed-use properties has jumped nearly 23% from $291 to $357. Our recent sale of 117 Wilson Avenue suggests such price increases are just the beginning. The property, a 4,125 square foot mixed-use building with three residential units and one retail unit just sold for $2.5 million, which translates to an impressive $606 per square foot. Mixed-use buildings are just one property type in Bushwick being positively affected by the demand for commercial space.

Commercial space in Bushwick is also seeing a sharp increase in pricing. Some retail rents on Irving and Knickerbocker Avenues, which offer access to the J, M, Z and L trains, have reportedly hit $60 per square foot. These rents are on par with other neighboring yet more established retail corridors such as Greenpoint’s Franklin Street and South Williamsburg’s Graham Avenue. One new commercial project popping up in the area will be Punch Bowl Social, a 20,500-square-foot bowling alley, bar and gastro diner at 199 Starr Street and 348 Troutman Street, two interconnected properties being leased by Seasons development from Cayuga Capital Management. Cayuga Capital Management bought the properties in March 2016 for $10.5 million, or $510 per square foot. Additionally, Northeast Equity, an affiliate of Bert E. Brodsky & Associates, purchased 227 Starr Street a 2,000 square foot building for $850 per square foot with reported plans to convert to retail.

Bushwick’s office market is shaping up to be a new phenomenon. The neighborhood has several office buildings coming online in the near future, so we should have a clearer picture of pricing and rents soon. Many development sites, buildings and warehouses sold in the last few years were in need of considerable upgrades and the scale of capital being deployed should greatly benefit the area.

A great example is 95 Evergreen Avenue, the old site of Schlitz Brewery, which was purchased by Hornig Capital Partners, Savanna, and Chelsea Village Associates for $33.7 million in 2015. The 170,000-square-foot warehouse building is being converted into a mix of office and retail space. Another example is 839 Broadway, which was was purchased for $11.5 million by Deergrow Developments in December 2015. The 30,000 square foot site was converted to office and retail space, recently signing the co-working office space provider Cowork|rs to a 20-year lease.

Residents in the area welcome the new developments and are more willing to place long term roots in the area due to their formation. Being a live/work area with a significant retail representation will continue to attract even more new residents. With this abundance of commercial activity throughout the neighborhood, Bushwick is laying the foundation for continued, sustainable growth for its real estate values and broader economy.