Brooklyn on fire

These days Brooklyn seems to be the buzz word on almost every real estate investor's list. So is it hot or overheated? When thinking of New York City most people think "Manhattan," however, over the past 12-18 months many have come to recognize that Brooklyn is not a second rate place to live for those who can't afford Manhattan but rather a thriving multicultural city within a city. Recently, many properties built for condos have gone rental resulting in a sudden supply of new rental housing that previously didn't exist. These new properties are getting top of the market rents, some as high as $45-50 per s/f. With condo projects in Williamsburg fetching in excess of $1,000 per s/f on average, it's safe to say that rents will continue to rise. The new high rents are justifying renovation of older properties which are attracting even more people to the borough and further driving rent growth. The result, soaring investor demand from players that didn't really play in Brooklyn until now as evidenced by both Invesco and Waterton's recent Brooklyn Purchases. Investors are now chasing Brooklyn rent regulated buildings for their built in upside with downside protection, while also chasing the free market deals that allow them to immediately capitalize on rising rents. GFI Realty Services, Inc. is seeing the results of this with close to 30 deals sold in Brooklyn in the last 14 months and more listings in the borough then we have seen in a long time. All in all, when you factor in the limited supply of land, construction costs and proximity to Manhattan, Brooklyn will be a solid investment for years to come. Michael Weiser is an executive vice president at GFI Realty Services, Inc., New York, N.Y.