Too Much of a Good Thing for Brooklyn Condo Market?

In New York City, where too much of a good thing is never enough, it may finally be enough – at least for some sectors of the real estate market. Just as over-development along Billionaire’s Row around 57th in Manhattan caused prices to soften, so has the construction boom in Brooklyn caused rental prices to drop.

According to a recent front page article in the New York Times, written by Charles Bagli, there are 19 residential towers either recently completed or under construction along a 10 block section of Flatbush. When all are competed, there will be a total of 6,500 new apartments – mostly rentals. Another four buildings on a nearby street will add almost 1,000 more units.

With so many new apartments in the neighborhood the Brooklyn rental market seems poised to “zoom right past the boom, to glut”, is how one research firm sees it. The market is saturated and may take a few years to stabilize. Like landlords of the highest-priced properties in Manhattan have done, Brooklyn developers are striking deals in order to fill their buildings.

At one new tower, the landlord is offering two months free rent with a 14 month lease and the use of the building’s fitness center and other amenities for a year at no extra charge. At other new buildings, similar “free rent” programs are being offered, in some cases as much as four months!

Free rents are hardly what one would expect in Brooklyn, where housing demand has been on the rise for a decade or more. This demand has been driven by the borough’s reputation as a haven for hipness, start-ups, and young professionals wishing to start a family. However, the original hipster neighborhood, Williamsburg, is too expensive and the convenient commuter line into Manhattan has been temporarily shut down, thereby leaving the neighborhood less appealing.

The boom in this part of Brooklyn owes its beginnings to the development of an arts district around the Brooklyn Academy of Music and the Barclays arena along with the adjoining Atlantic Yards project, now known as Pacific Park.

Developers and consultants are not predicting that rents will plunge – rather, prices will stagnate and ease in the short term. Jonathan Miller, a principal with a real estate and consulting firm, maintains that the problem is that “too many units are skewed to the upper end of the market.”

Some housing advocates argue that there are not enough apartments for low-income tenants being driven out by gentrification. One developer claims to have received 80,000 applications for 181 subsidized apartments. Others complain developers are not building the infrastructure required for such a large influx of residents.

Despite the various pros and cons, one developer says he’s not worried about the number of buildings going up. “Brooklyn is still the coolest place on the planet.”

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  • peter depp

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