UPDATED: Sep. 22, 12:55 p.m. Companies looking to spend between $60 and $70 per square foot on office space can choose between One World Trade Center, a host of Midtown buildings – and now the Brooklyn Navy Yard.
Rudin Management and Boston Properties started marketing their office development Dock 72 last week, Rudin’s vice president Michael Rudin told The Real Deal. With asking rents ranging from the low $60s to mid $70s per square foot, the 675,000-square-foot building stands shoulder-to-shoulder with properties in pricier Manhattan neighborhoods like Midtown South, where Class-A rents averaged $72.44 in the first quarter, according to CompStak.
CBRE’s Sacha Zarba and Frederick Fackelmayer and Cushman & Wakefield’s Joseph Cirone are marketing the vacant space. Shared-office giant WeWork, which counts Boston Properties’ Mort Zuckerman among its key investors, signed on as an anchor tenant and will lease about a third of the building.
Dock 72 is among a crop of Brooklyn buildings looking to push the envelope in terms of rent. Kushner Companies’ and RFR Realty’s Dumbo Heights project, for example, is asking rents of about $60 per square foot. But the Navy Yard project stands out because unlike other office buildings, it is smack in the middle of a Brooklyn industrial park and far removed from any subway line.
However, Michael Rudin argued that Dock 72’s rent is actually a bargain if you factor in REAP benefits for businesses moving there from Manhattan, tenants’ exemption from paying real estate taxes because the land is city-owned, and other benefits. This, he argued, means tenants’ total expenses at Dock 72 are comparable with Manhattan buildings where rents are far lower. He acknowledged that transportation is an obstacle, but said the building’s amenities and views of the Manhattan skyline would more than make up for it. “There are very few waterfront properties left in Brooklyn, and none of them have a great deal of developable area (like Dock 72)” he said.
Boston Properties and Rudin are developing the project in a 50/50 partnership on land leased from the Navy Yard for 99 years. Construction of the $410 million project is yet to kick off, but the developers hope to have the building ready for move-in in the first half of 2018.
NOTE: This article has been updated to better reflect the tax benefits available to Dock 72 tenants – an important factor in the rent equation.