While the skyrocketing demand and prices for single family townhouses in Brooklyn Heights has been well-publicized, very few residents are aware of the surging retail values in the area. Mixed-use buildings have become highly coveted as investors seek opportunities to capitalize on the strong local luxury residential market.

For example, T-Mobile recently signed a record-breaking $200 per square foot lease for a 2,220 square foot space at 93 Court Street. This set a new standard for this busy retail strip that runs from Atlantic Avenue to Montague Street. Earlier this year, high-end cafe Paris Baguette opened just two doors down at 97 Court Street. In that area, retail rents have increased from approximately $125 per square foot in 2013, to nearly $200 per square foot last year. And along Montague Street, retail rents are now pushing past $150 per square foot.

This trend has affected commercial building values as well. Two investment firms recently teamed up to purchase 142 Montague Street for $8.5 million (approximately $850 per square foot). The reasoning behind the purchase was the potential longterm upside in the two retail spaces. Investors now believe Brooklyn Heights may be the next SoHo - a prime neighborhood where luxury residential real estate will lead to high-end luxury retailers willing to pay higher rent for access to wealthy local residents.

Only time will tell if Brooklyn Heights retail will reach SoHo-like levels. But as the Brooklyn Heights residential market thrives, one thing is certain - investors will continue to seek out these value-add opportunities in the local retail market.