After years of housing oversupply in Brooklyn, development has declined and rents have risen
The Brooklyn rental market, which has seen a record influx of new rentals in recent years, is starting to stabilize.
Faced with fierce competition, many landlords offered free rents and other concessions to help them enter into rental agreements. However, the number of new units becoming available has slowed over the past year, and according to Nancy Packes Data Services, this year has seen a sharp decline.
“It is welcome news to everyone that we have been able to pick up the 50-year high in supply and continue to increase rents – it is testament to the strength of the market,” said Nancy Packes, president of the company. “We believe that most of the supply is now behind us, which is very beneficial for the rental market.”
According to Packes, more than 3,000 new commercial rental units became available in Brooklyn in 2015, and that number rose to nearly 6,000 in 2017.
Last year, that number fell to just over 4,600. Just over 1,600 new units were launched in the community in the first eight months of 2019, Packes said in an interview. The company predicts that another 574 customary units will be added by the end of the year.
“We have been saying that for a long time … The great glut of supply is behind us,” she said.
The Brooklyn housing market, as well as other key issues such as reallocation and office renting, will be discussed on September 10th at Bisnow’s Brooklyn State of the Market event.
Courtesy of Moinian Group and Bushburg Properties
123 Linden Blvd. opens for rent in September.
The median rent in Brooklyn was $ 3,000 per month in July, which is a record according to data from valuation firm Miller Samuel. The concession rate also fell: 34% of leases in July had incentives, down from 41% in July last year.
“It’s been a great summer,” said Andrew Barrocas, CEO of MNS, who will speak at the event in Brooklyn next month. “There is still a lot of rental product available, but there is still a lot of demand.”
For some, the growing range of Brooklyn rental products and the headlines that documented it were worrying. In 2016, there were 19 residential towers that were just being completed or being built along a 10-block section of Flatbush Avenue from Barclays Center north to Myrtle Avenue, the New York Times reported at the time.
“We were all concerned,” said Steve Kliegerman, president of Halstead Property Development Marketing.
His firm’s data shows there are nearly 12,000 rental units in the pipeline in the community that Kliegerman believes will be absorbed in the next two years.
“The developers have been on the right and rents are rising,” he said. “For some of us this is a bit of a surprise.”
Courtesy Steiner NYC
The pool in the Steiner NYC Brooklyn rental building of the Hub
Not everyone was surprised. Doug Steiner, whose Steiner NYC developed the hub, a 55-story rental tower at 333 Schermerhorn St., said he was never concerned about an oversaturated market.
Steiner said the hub, which started leasing in spring 2017, is almost full. According to StreetEasy, there is a one-bedroom bedroom there for $ 4,156 per month with no brokerage fee.
“If we were the only building on the market I would be more concerned because it wouldn’t be an established place for people to live,” Steiner said of the competition, although he believes institutional capital was always at the start of the building’s development still careful with Brooklyn.
Earlier this year, the company blocked $ 330 million from Nuveen, TIAA’s real estate sector, to refinance the building and sold an interest in the building.
“The pipeline of development when we started wasn’t a surprise or something I was worried about,” he said. “The concessions [at the building] were half the competition and our rents were higher. “
Steiner, who owns Steiner Studios in the Brooklyn Navy Yard and also developed the first Wegmans supermarket in New York City, said the neighborhood is a good place to develop for decades to come.
The leap in rental trends in Brooklyn was due to a high point, experts say: rising land prices in Manhattan, the expiring 421a program (which later became an affordable New York), and a decline in banks’ willingness to lend for condominium projects.
New York created 820,400 jobs from 2009 to 2018, according to the New York State Comptroller, and advocates for the district say Brooklyn’s housing market will benefit from the city’s growing population.
While there is still a significant development pipeline in the community, each neighborhood has its own supply and demand dynamics.
“There’s a lot of supply coming up, but I think it’s generally in some areas,” said Jacob Entel, Moinian Group’s director of residential real estate.
Moinian has partnered with Bushburg Properties for its first Brooklyn development, a 467-unit building at 123 Linden Blvd. in Prospect Lefferts Gardens, known as PLG. Rents for a studio start at $ 2,300, Entel said, and the building will begin its leasing efforts next month.
While Entel acknowledged the building will face competition, it believes the difference from PLG will be in a number of amenities in an area where few rental properties have developed: a building in downtown Brooklyn, said he without the price tag in downtown Brooklyn.
“Williamsburg doesn’t have good transportation, and downtown Brooklyn is expensive,” he said. “When we were building [Manhattan luxury rental building] Christ people said the same thing – but we filled it up. And when you build a beautiful product, people are willing to pay for it. New York is growing all the time. “