Red Hook commercial real estate

A port neighborhood, still built around the water

Red Hook grew up as a working port. Atlantic Basin, Erie Basin and the piers along Buttermilk Channel handled grain, coffee, sugar and general cargo, and the brick warehouses along the waterfront stored it. Shipyards and dry docks repaired vessels. Thousands of longshoremen lived in the neighborhood.

Containerization moved most of that activity to New Jersey, and the construction of the Brooklyn-Queens Expressway and the Gowanus Expressway cut Red Hook off from the rest of Brooklyn. The result is the Red Hook commercial market today: large waterfront parcels, heavy masonry warehouses, many acres of open storage and parking, and a small residential core around Van Brunt Street and the Red Hook Houses, one of the largest public housing developments in the city.

That history explains why so much of Red Hook remains zoned for manufacturing and why lot sizes here are larger than almost anywhere else in brownstone Brooklyn. It also explains why rail, port and waterfront rights still come up in due diligence on some parcels.

Getting trucks and people in and out

Red Hook has no subway station. The closest trains are the F and G at Smith-9th Streets and Carroll Street, a long walk or a bus ride away. Buses connect along Van Brunt Street, Columbia Street and Lorraine Street, and NYC Ferry serves the waterfront. For a business with many hourly employees, how staff get to work is a real planning issue and sometimes a recruiting one.

For trucks, Red Hook is excellent. The Hugh L. Carey (Brooklyn-Battery) Tunnel puts Lower Manhattan minutes away, and the Gowanus Expressway and BQE connect to the rest of Brooklyn, Queens and Staten Island. Hamilton Avenue is the main truck spine. That combination of near-Manhattan location and highway access is the core reason distribution users want to be here.

Inside the neighborhood, streets are narrow in places, some are still cobblestone, and the street grid ends at the water. Before leasing or buying, we drive the actual truck route from the highway to the door and check turning radiuses at the corners that matter.

What a last-mile operator actually needs here

Delivery stations and last-mile hubs are different from traditional warehouses. The building is often less important than the land around it. Operators look for:

• Van and vehicle parking. Large fleets of delivery vans need secure, paved parking, often more land than the building footprint.
• Electrical capacity. Fleet electrification needs significant power for chargers. Con Edison service upgrades can take a long time and may drive site selection.
• Multiple loading positions. Trailers arriving overnight and vans departing in the morning need separate, efficient circulation.
• Clear height and floor area. Sortation equipment needs reasonable clear height and level floors, which older multi-story warehouses often lack.
• Zoning and community concerns. Truck and van traffic near homes and schools draws attention. The city has debated how to regulate last-mile facilities, so confirm current zoning requirements before committing.

Older Red Hook warehouses with columns, upper floors and small doors rarely meet these needs without major work. That is why paved yards and one-story buildings with large lots command a premium here.

Designing and insuring for flood in Red Hook

Hurricane Sandy pushed water through much of Red Hook in 2012. Ground floors, basements, electrical rooms, inventory and vehicles were lost, and some businesses took many months to reopen. Every commercial decision here should start from the assumption that water can get in again.

For tenants

Ask where the building’s electrical service, switchgear and mechanical equipment sit. Ask what happened in this building during Sandy and what has changed since. Keep inventory and equipment raised where you can, and plan for a recovery period. Read the lease’s casualty clause closely: who repairs what after a flood, how long the landlord has to restore the space, whether rent abates, and whether you can terminate if restoration takes too long. Carry business interruption and contents coverage that actually covers flood, because standard policies often exclude it.

For owners and buyers

Flood zone status affects lender requirements, insurance cost and what you can do to the building. Substantial improvements to a building in a flood zone can trigger the requirement to bring it up to current flood-resistant construction standards in the New York City Building Code. That can mean raising equipment, dry floodproofing walls and openings, or using flood-resistant materials below the design flood elevation.

As a builder, we look at Red Hook buildings in terms of what floods and what it costs to fix. A building with equipment on the roof or upper floor, flood barriers at the doors and a concrete ground floor recovers much faster than one with a basement full of switchgear. Price those differences into your offer. Get an elevation certificate if one exists, and quotes from both the National Flood Insurance Program and private carriers through your insurance broker.

Public resiliency work around the neighborhood

After Sandy, the city began coastal resiliency work in Red Hook, including flood protection measures around Atlantic Basin and other low points. Projects like these reduce risk but do not eliminate it, and they take years to complete. Construction can affect streets and access along the waterfront while underway. Check the current status of public resiliency projects near any property you are considering, and do not assume they will change your flood zone or insurance on any particular timeline.

Van Brunt Street and the waterfront destinations

Van Brunt Street is Red Hook’s main street: a long run of two to four story buildings with bars, restaurants, a few shops, bakeries, galleries and services. It serves residents, workers from the nearby warehouses and a steady flow of weekend visitors who come for the waterfront, the views of the harbor and the Statue of Liberty, and the food and drink businesses tucked into old warehouses.

The big retail anchor is the IKEA store on the Erie Basin waterfront, which brings regional shoppers but tends to keep them inside its own site. Smaller destinations in converted waterfront buildings, including food producers and beverage makers with tasting rooms, draw visitors who then spend on Van Brunt.

Retail economics here depend on destination appeal. A tenant that people will travel for can thrive. A business that needs walk-by traffic usually struggles outside of weekends. Rents generally reflect that, and landlords who understand it lease more successfully. For tenants, the questions we ask are about weekday business, parking for customers, delivery access and flood history of the space.

Food production, distilleries and commercial kitchens

Red Hook’s older warehouses are a natural fit for food and beverage manufacturers: commissary kitchens, bakeries, coffee roasters, breweries, distilleries and specialty food producers. The draw is space, ceiling height, loading and manufacturing zoning that allows production along with some retail or tasting.

These uses are infrastructure heavy, and that is where Sal’s background as a contractor and plumbing contractor helps. Food production needs floor drains, grease interceptors, hot water capacity, gas service, ventilation and often process water and wastewater planning. Breweries and distilleries add tank loads, fire separation and specific licensing. Older Red Hook buildings may have none of this in place, and adding it in a flood zone requires care about where equipment goes.

Before a food or beverage tenant signs, we walk the space with an eye on drainage slopes, sewer connection, power and gas, slab condition and what work is needed to pass inspections. That review often changes the negotiation over who pays for what, and it prevents the most common surprise in this kind of lease: discovering after signing that the space cannot support the operation without a major investment.

Development and redevelopment limits

Because most of Red Hook is zoned for manufacturing, new development generally means industrial, commercial or mixed industrial uses rather than housing. Large lots and waterfront parcels can support new logistics buildings, multi-story industrial, self-storage, studios or commercial uses where zoning allows. Any proposal involving residential would require a public rezoning process, which is long and uncertain.

Construction here comes with the same challenges as other waterfront sites: soft soils and fill, high groundwater, possible contamination from past industrial and maritime uses, bulkhead condition and flood design. Sites on the water may also require state and federal permits for any work near or over the water. Plan for environmental testing and geotechnical work before committing to a price.

Outdoor storage and yard space

One of Red Hook’s most valuable and least visible property types is open land: paved and gravel lots used for truck parking, container and equipment storage, construction staging, vehicle fleets and materials. Contractors, bus and limousine operators, construction companies and logistics firms all compete for it.

Yard leases have their own issues. Confirm that the use is allowed by the zoning and that any required permits are in place. Check the surface: drainage, paving condition and whether the ground can take heavy loads. Find out about fencing, lighting, security and any shared access with neighbors. Ask whether the land has environmental history, since past storage of fuel or materials can leave contamination that a tenant does not want to inherit. And because yard sites are often held by owners with long-term development plans, negotiate term and termination rights carefully.

Due diligence checklist for a Red Hook property

1. Confirm the zoning district and that your intended use is allowed, including any accessory retail or tasting room.
2. Pull the flood zone, an elevation certificate if available, and the building’s Sandy history.
3. Get insurance quotes for flood, property and business interruption before signing.
4. Order a Phase I environmental site assessment. Many Red Hook parcels have industrial or maritime history.
5. Drive the truck route from the Gowanus Expressway or the tunnel to your door with a full-size vehicle in mind.
6. Confirm electrical service, including what Con Edison would need for any upgrade.
7. For waterfront parcels, have the bulkhead inspected and ask about any outstanding permits or obligations.
8. Check how employees will commute and whether that affects hiring.

Red Hook compared with nearby industrial areas

Sunset Park, to the south along the same waterfront, has larger multi-story industrial complexes, more transit and a deeper manufacturing base. Gowanus, just east across the expressway, has smaller industrial buildings, a recent rezoning and more mixed-use development. North Brooklyn industrial areas in Greenpoint and Bushwick serve similar users but with different access to Manhattan. Red Hook’s advantage is the combination of large lots, waterfront and the tunnel to Lower Manhattan.

How DiBe works in Red Hook

We represent logistics, industrial, food production and retail tenants, and we advise owners on leasing, sales and redevelopment of Red Hook property. Sal’s construction and plumbing contracting background lets us evaluate flood mitigation, utility upgrades and build-out costs before a deal is set, which matters more here than in most of Brooklyn. See tenant representation, investment sales and owner’s representation, or call 239-256-5005.

The marine terminal, the cruise terminal and what they mean nearby

The container terminal and the Brooklyn Cruise Terminal sit on the northern Red Hook waterfront. Cruise days bring buses, taxis and traffic to the area around Pier 12, and terminal operations bring trucks. Neighboring properties feel both.

The city has taken control of the Brooklyn Marine Terminal and is planning its future through a public process that includes port uses and other possible development. Whatever comes out of that process could change traffic, land values and the mix of uses around the northern waterfront over the long term. We would not underwrite any specific outcome, but buyers and long-term tenants near the terminal should follow the planning and factor the uncertainty into their decisions.

Buying a Red Hook warehouse as an investor or owner-user

Red Hook industrial property rarely trades, and many buildings have been in the same hands for decades. Buyers tend to be owner-users who want control of their operating location, industrial investors, and exchange buyers looking for hard assets near Manhattan. For an exchange buyer, the timing rules of a 1031 exchange can be tight in a market with so few listings, so start the search early and talk to a qualified intermediary and CPA. See our 1031 exchange advisory page.

Valuation depends on land as much as building. A one-story building on a large lot with yard space may be worth more than a bigger multi-story warehouse with poor loading, because the land serves more users. Flood mitigation already in place adds value. So do a strong tenant and a lease that runs long enough for the buyer’s plan.

For example, a hypothetical owner-user running a building supply business might weigh buying a Red Hook warehouse against leasing. Owning protects the business from being displaced by a sale or redevelopment, but it ties up capital and brings flood and maintenance risk. We model both paths so the decision rests on real numbers.

Studios, artists and creative tenants

Long before logistics companies arrived, artists, woodworkers, boat builders, set builders and photographers filled Red Hook’s waterfront warehouses. Many still work here in shared buildings with small studios on upper floors. These tenants value light, ceiling height and affordability over modern systems, and they often stay for many years.

For owners, creative tenants can provide steady income in buildings that would be hard to lease to distribution users. For tenants, the key issues are legal use under the certificate of occupancy, fire safety in older buildings, freight access and lease length. Red Hook studio space is limited, so tenants who find a good fit should negotiate renewal options early. Landlords considering a sale should know that a building full of small creative tenants is valued differently from one with a single industrial user, and should price and market it accordingly.