CRE Pros’ Predictions for 2020: Development in Brooklyn & Queens, Hudson Yards Takes Spotlight

Last year was great for markets all around the world. Although the trade war and tensions in the Middle East may have put a bit of a damper on stocks, real estate prices continue to reach all-time highs. We surveyed New York City’s commercial real estate (CRE) professionals to determine how 2020 might look after a stellar 2019.


  • Office occupancy and lease rates are forecasted to remain mostly flat, if not decline slightly.
  • New developments like Hudson Yards will continue to draw tenants from Midtown.
  • Brooklyn is expected to draw the most development, followed by the Bronx and Queens.
  • The CRE market is cautiously watching the regulations in the residential market, which may slow investment.
  • Many see transaction volume decreasing in 2020 as Brooklyn and Hudson Yards cool off. 

Occupancy & Lease Rates to Remain Flat or Even Decrease

Only 19% of respondents predict that occupancy will increase in Manhattan, and 44% predict lease rates in all boroughs to increase. Furthermore, new developments will continue to draw tenants from other neighborhoods.

“Hudson Yards will be the new center of commerce in NYC,”said District Leasing, Inc.’s Dylan Murphy.

Furthermore, 58% of respondents also expect transaction volume to decrease in 2020 compared to 2019, citing high prices, a low number of assets for sale, and uncertainty in regulations. Other respondents also believe high prices in Midtown will push some tenants to Brooklyn and Queens neighborhoods – like Long Island City, where rents are lower.

“I would venture that this number will stay relatively flat,” one respondent stated. “There may be higher demand for class B and C office space, but occupancy will likely depend on the landlord’s ability to update older spaces and compete with new construction in the same geographic markets.”

Political Uncertainty May Trickle into Office Market

The political climate is shaking up foreign investments. In fact, 63% of respondents believe there will be a shift in where and how foreign capital is deployed in the NYC real estate market, citing the current administration’s foreign policies and changes in regulations for the rental market, among others.

“New York City is robust and the CRE market within New York City will continue to grow,” said Bestreich Realty Group Associate Toby Waring. “That being said, if the similar laws that have been brought upon rent-stabilized properties impact leasing and free-market apartments, velocity will undoubtedly decrease because there will be a huge ‘gap’ between what properties are actually worth and what owners think they are worth.”

Development Focus Shifts to Brooklyn, Queens & Bronx

Of the five boroughs, 41% of our respondents see Brooklyn drawing the most office development in 2020, followed by the Bronx with 36% of the responses and Queens with 32%.

“Bronx still has land that can be developed at reasonable prices,”said Forest Park Properties Principal Broker, Raymond Mordekhai. “Queens will continue to expand its core development areas.”

However, Manny Kabiri of Capital Real Estate Advisors, pointed out, “Some areas are not easy to demolish and rebuild because of city/state regulatory policies and outdated infrastructure. Hudson Yards will have the most development in years to come.”

Opportunity Zones & Coworking Spaces May Need More Exploration

Opportunity zones aren’t understood well enough to play a major role just yet. However, most respondents believe that the need for them is there, and that the investments will follow. The Bronx and Queens were the two boroughs that many believe will capture most of the attention from these zones.

Coworking projections are relatively split with 54% of respondents seeing them expanding further in 2020, while 44% say they will cool off. Robin Abrams, vice chairman at Compass, is in the latter group.

“There is a lot of that space available that needs be absorbed,” she said. “I don’t see a lot of new cowork space being developed or increased demand, as demand has stabilized. There will be some demand that can be accommodated.”

Even still, optimism exists.

“Co-working spaces are great with the amenities and flexibility of lease terms,” said another respondent.

Declining Retail Offers Options for Office in 2020

Retail spaces offer interesting avenues for offices.

“More traditional office tenants … will rent secondary retail space on side streets on East Side and West Side instead of office space,” said one respondent.

And, Abrams added, “For retailers that can predict their sales, it is a tenant’s market, with ability to lock in long-term at attractive rents.  Ecommerce brands opening brick-and-mortar stores and international brands have a lot of opportunity, as do national chains that may want to expand. Even if the trend is for smaller or fewer stores, there are market areas where retail is prevalent and successful.” Overall, expectations of rising prices and developments have been tempered. Trade war dynamics that are shaking up foreign investments may subside or be replaced by other international players. The political climate in NYC may still affect the commercial real estate industry, but the mood appears to be cautiously optimistic for 2020.

Patrick McGregor

Patrick McGregor

Patrick McGregor is a senior writer covering the real estate industry and overall economic trends in the United States for several Yardi product publications. He also holds an MBA from Thunderbird School of Global Management. Patrick was previously a commercial real estate analyst at Yardi Matrix for five years. His work has appeared in the New York Times, Bisnow, GlobeSt, The Real Deal, Business Insider, The Denver Post, The Motley Fool, and more.