A plan by Tishman Speyer to build 10 stories of offices above a Macy’s Inc. store in downtown Brooklyn will bring needed work space to an area of New York where demand is growing.
The project is the first in Brooklyn for Tishman Speyer, a developer and investor that controls Manhattan’s Rockefeller Center and Chrysler Building. The company agreed to buy a portion of the site at 422 Fulton St., where Macy’s has operated since 1865, according to a statement Wednesday. The store will remain at the base of the building and will be renovated.
Brooklyn’s appeal as an office market is increasing, especially among technology and media companies with employees who live in the borough. Tishman Speyer’s project will begin to address the need for offices in an area that is accessible from multiple subway lines and has one of the lowest vacancy rates in the region.
“Our commercial vacancy rate is at 2.5 percent,” said Tucker Reed, president of the Downtown Brooklyn Partnership, a business advocacy group. “It’s essentially nothing. We need all the office space we can get.”
The project’s retail component, which will include a Starbucks coffee shop, will help draw office tenants of all sizes, said Michael Shenot, a managing director at brokerage Jones Lang LaSalle Inc.
Mixed-use developments such as Rockefeller Center and lower Manhattan’s Brookfield Place “have been proven across the whole city to be well-received,” said Shenot, who isn’t involved in the Fulton Street project. “Tenants view the ability to have retail and amenities adjacent to their offices to be a real value.”
Construction is slated to start next year and be finished in 2018, according to the statement. Macy’s will stay open throughout the process. Tishman Speyer also agreed to buy the retailer’s nearby Hoyt Street parking facility, which may be used for future development.
Bud Perrone, a spokesman for Tishman Speyer, declined to comment beyond the statement.
The company’s foray into Brooklyn, on a block filled with discount stores, shows how the borough’s appeal for developers has extended beyond family-owned companies that have operated there for decades, Shenot said.
“The big change is institutional capital coming into the market, firms that have access to pension-fund money are now investing in Brooklyn,” he said. “The investors are coming from Wall Street, from around the world.”