Brooklyn: Not going anywhere anytime soon by Bollinger

Brooklyn is still cooling off but still going strong as I wrote in my last article. Median sales overall are higher but suggest a smaller increase ahead than in previous years. With the end of the 421a tax abatement new development permits have wilted. January city wide construction building permits filings were actually lower than the weakest year for permits during the financial crisis in 2009. Given the large flux of permits before the expiring of 421a it will be a while before we see the full impact of this regulation. Brooklyn is still going strong.

But as real estate is local it depends on what market and area of Brooklyn you are looking at. Peeling off some layers of data show different trends. The luxury market in Brooklyn is holding steady but showing signs of lower price growth ahead. Median housing (1 - 4 family) is at an all-time high since 2012 with an 11% increase from last year. Affordable housing is moving forward too with DeBlasio choosing development teams for the horrible “infilling” plans in Mott Haven, Brownsville, and Fort Green. The developments do have some bells and whistles within the project like senior centers, commercial kitchens, a wellness center, and fitness studios. The best amenity for all residents of Brooklyn would be a solution to poverty and the need for affordable housing.

Looking at different areas of Brooklyn shows different trend lines as well. Not surprisingly the highest priced areas of Brooklyn are showing the largest slowdowns in price gains. North Brooklyn, Northwest Brooklyn, and Prospect Park being three of those areas. Conversely, East Brooklyn areas like Brownsville and East NY are showing the strongest growth. The Rabsky Group is developing the old Rheingold Brewery into a 400,000 s/f space with 392 units making it the largest building in Bushwick. With the inevitable L train shutdown looming over many Williamsburg hipsters and other Brooklynites who rely on the L train service watch for the areas in Bed-Stuy, Bushwick, and Ridgewood that straddle the J, M, and Z lines to become more active. The J, M, and Z lines are good subways and ripe for development. But East NY is the spot to watch since mayor de Blasio recently up-zoned it and plans to build a lot of affordable housing there. I like some of Brooklyn borough president Eric Adams’ ideas. Adams has proposed building a new 300,000 s/f office building at Broadway Junction to improve commercial opportunities. He also wants to consolidate and move some government services to East NY like the Department of Homeless Services and the Department of Mental Health and Hygiene amongst others. I have some off-market opportunities that would suit the city nicely. With the opportunity of “whole community” planning around new commercial development and government agencies East NY has the chance to reinvent itself. Just as Park Slope was a gang infested war zone in the 80’s and Williamsburg was considered a slum in the 90’s East NY has a great chance of being reborn and add great value to our “New Brooklyn Rising”. I do hope we get more than just “infilling” solutions.

Speaking of our “New Brooklyn Rising”, 9 DeKalb Ave has officially been approved for construction in downtown Brooklyn by the NYC Landmarks Commission last month. This will be the tallest tower in Brooklyn when finished. Not only that but this project is being partially funded by Jared Kushner’s Kushner Co.’s. This is noteworthy because it is a growing trend of New York development firms that are branching out into the financing business. This should help continue the development surge going on right now since who better to assess risk than someone within the industry? An interesting new trend with all the historic amount of developing going on the city.

Though the numbers vary, Brooklyn overall is continuing to “rise” with many new developments underway and still a strong market. I think Dottie Herman says it best in the April 2016 issue of ELLIMAN. Herman said, “We expect the year ahead will see healthy growth in home sales and prices, though at a slower pace than in 2016. This slowdown is not a sign of distress but rather strength, as the market returns to normalized and sustainable conditions.” The data does seem to support this.

Daniel Bollinger is a senior associate at Azad Property Group, New York, N.Y.