News
BROOKLYN WOOS ANOTHER BUYER
December 4, 2012
| Empty nesters, young families, or someone just looking to have fun: Brooklyn attracts a wider age range than Hugh Hefner. (Congrats on the new engagement, buddy.) That sentiment, expressed more artfully by panelists at Bisnow's Future of Brooklyn event Friday, was matched by SL Green—it announced yesterday that it'll make its first residential Brooklyn buy, with 72 new apartments and 12 townhomes in Williamsburg. |
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| “We knew it was a great market for people who want more space than in Manhattan,” says Toll Brothers City Living division prez David Von Spreckelsen. His firm (in a JV with Starwood Capital) is building waterfront-facing condos and a hotel at Brooklyn Bridge Park. More people are living in the borough and not commuting, while enjoying everything at their doorstep. Even though there’s no tax abatement, he expects to attract people from farther out in Brooklyn, Manhattanites looking at private schools in Brooklyn Heights or five-minute commutes to Wall Street, or retirees who want convenience. (The Boca Raton Economic Development Corp isn't going to like this.) |
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| For those who do commute, it’s faster to get to Manhattan from Brooklyn in many instances. “The L train is lined with gold,” says David Behin, president of MNS’s investment sales and capital advisory division. (SL Green's purchase was only three blocks away from an L stop.) Prices are only a little less than Manhattan, but you’re getting two to three times more. And in Downtown Brooklyn, you’re seeing full-amenity buildings with doormen and pools. (For those who grew up in Brooklyn, you remember having to visit your friends in Staten Island for the latter.) He’s been renting out some units for as much as $70 to $80/SF, even in North Williamsburg. |
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| “People want the urban feel without the density,” says Massey Knakal director of sales Stephen Palmese. Although Brooklyn building trades this year are expected to be 38% less than 2007’s peak and dollar volume down 21% in that same period, the average price per building is up 22%. Among the reasons: a lack of available properties for sale. |
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| Go east, young New Yorkers! People are moving even further out, from Williamsburg to Bushwick to Crown Heights, says Marcus & Millichap regional manager John Horowitz. “Buildings are expanding throughout Brooklyn, with the rental market moving into secondary and tertiary markets.” There are also certain people who want certain neighborhoods, “and they’ll pay for that.” |
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| Cayuga Capital Management principal Jamie Wiseman—whose firm caters to the post-college crowd and the apartments, restaurants, and bars that come with them—says it’s a bifurcated market of Gen X vs. Y. “Our customers are moving east,” he says. “Grownups now live in Williamsburg.” He also compared northern Brooklyn to the Meatpacking District of 2002. “Think of how fast it shifted. It was cool and people wanted to be there. You’ll see that here.” |
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| But the borough is facing a dramatic crisis, says The Dermot Co COO Stephen Benjamin. The city needs to get its hands around the tax abatement and clean it up, or we’ll have a shortage of housing. “Costs far exceed net cash flow, especially when you need to subsidize 20% of units.” There also needs to be zoning changes without enormous confrontation. “If we built more, there will be more opportunities for people, and prices will be a bit lower.” |
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| Tarter Krinsky & Drogin partner David Pfeffer moderated. And you can see our previous coverage of the event here. |
