Brooklyn beginning to REAP rewards from half-price rents.

As director of leasing for Two Trees Management Co. and working to bring commercial tenants to Brooklyn, REAP has been one of the most compelling arguments I've seen to persuade companies to move from Manhattan to DUMBO.

In the largest Brooklyn REAP tax benefit (Relocated Employee Assistance Program) lease deal since Forest City Ratner's Bank of New York transaction, Two Trees Management Co. rented 40,000 s/f in its 55 Washington Street office building in DUMBO to Midtown South's Wireless Generation, a company that develops and provides software and technology for use in schools.

The REAP benefit will result in a net effective rent reduction of approximately $11 per square foot, cutting Wireless Generation's rent to approximately 50% of market rates. Rob Lowe and Curtis Brown of Cushman & Wakefield represented the tenant.

The new lease highlights the power of REAP, a lucrative tool for attracting tenants to the boroughs. The "as-of-right" New York City Department of Finance tax incentive plan offers large tax refunds and credits to tenants relocating all or part of their businesses from south of 96th Street in Manhattan to eligible buildings in the outer boroughs and north of 96th Street.

Another former Manhattan tenant, the law firm Jones, Jones, Larkin & O'Connell, uses REAP to great effect, cutting their rent by $10 a square foot. The law firm has occupied 9,200 square feet in 45 Main Street, a Two Trees building, since 2002.

Managing partner William Jones commented, "REAP helps us manage our long-term occupancy costs and subsidizes new job creation, adding to Brooklyn's job base."

Caroline Thebaud, manager of the Two Trees tax incentive office, said the firm has spent years promoting the program, which is available to tenants large and small.

Over thirty DUMBO tenants have received REAP benefits, most of them less than 3,000 s/ft in size. Still, few brokers and tenants are aware of the substantial and effective benefit program, which grants cash tax refunds during the first five years of the program if the tenant's benefit exceeds their tax obligation.

The REAP program was designed by the City and the State of New York to encourage existing businesses to relocate qualified buildings in targeted areas of the City by providing a tax refund and credit of $3000 per relocated employee. New jobs created during the 12-year tax credit and refund program period can also be benefited. Businesses located south of 96th Street in Manhattan that have conducted, substantial business operations for at least 24 months are eligible as long as they sign leases for three years or more.

Under the program, a business may elect to establish a satellite office with as few as one employee from Manhattan or out of state. Future employee relocations and new job growth can be benefited at the eligible location, up to a maximum of twice the number of total employees at the time of application or 100, whichever is larger.

A growing tenant may take new space in the same building, or other eligible buildings, and keep their benefits. Two Trees buildings are the largest beneficiaries of the program, having signed more REAP-eligible leases than other owners in the boroughs. The firm works with tenants to help them understand the program by connecting them with successful applicants and guiding them to city officials.

BY CHRIS HAVENS, LEASING DIRECTOR, TWO TREES MANAGEMENT Co., INC.