With enclaves of young professionals searching for homes and neighborhoods ripe for redevelopment, Brooklyn has overtaken Manhattan to become New York City’s hottest real estate market. At Bisnow’s Brooklyn State of the Market event on Sept. 10, investors, financiers and developers will discuss the areas that they think are ready for change, and where they’re planning offices, residences and mixed-use developments. Register here for the event.
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Brooklyn is changing fast, and at the center of that change is Madison Realty Capital and its co-founder, Josh Zegen.
Only 15 years into its existence, Madison Realty Capital is one of the top construction lenders in the industry. Zegen has overseen more than $1.3B in deals in 2019 alone, including new multifamily buildings in Bushwick and the refinancing of a development in Broadway Triangle, a neighborhood between Williamsburg and Bedford-Stuyvesant.
Zegen sat down with Bisnow to give us a sneak peek at what he’ll be discussing at our Brooklyn State of the Market event on Sep. 10.
Bisnow: What still interests you about Brooklyn, though it’s a market you've worked in for years?
Zegen: What’s interesting is the sheer depth of the market. There’s always an emerging neighborhood that’s pushing forward. Lots of the submarkets that were emerging 10 years ago are now major institutional markets, which have really come into their own — Prospect Lefferts Gardens, Sunset Park, Bed-Stuy, Bushwick, downtown. These are becoming 24/7 areas with retail, office and even real hotel sectors. Brooklyn is no longer Manhattan’s neighbor, it’s the destination where people want to be.
Bisnow: What do you make of the hundreds of lenders joining the bridge space?
Zegen: Right after the last crisis, a lot of people left CMBS to join debt funds because they were expecting it to be out-of-the-box-type lending, to address situations that banks couldn’t address. But it’s really become another kind of commodity lending.
A lot of these firms are just doing light, value-add and moderate lease-up projects, and they’re taking equity-like risk for debt-like returns. They’re all competing for the same product, which is pushing them into secondary and tertiary markets that don’t have the safety or liquidity of the larger markets.
Madison Realty Capital is focused on higher value-add projects and construction. We see more opportunity in that area because it doesn’t fit squarely into a box.
Bisnow: What are you looking forward to at the Brooklyn State of the Market event?
Zegen: I haven’t been to a Bisnow event in a little while, and so much has changed in such a short period of time. For a while, the only growth industry people were talking about was tech. But we’re seeing excitement around other industries and asset classes again in Brooklyn. I’m excited to hear others’ perspectives on it.
Bisnow: How would you describe your role at Madison Realty Capital?
Zegen: I’m the co-founder of the firm, and I still touch just about every aspect of what we do — acquisition, origination, underwriting, asset management, servicing, workout, fundraising. We’re an 80-person organization now, but my co-founder Brian Shatz and I are still really a two-man investment committee.
Bisnow: What are you passionate about outside of your work?
Zegen: I have three young kids, and a lot of my time and my passion goes to them, but I also love to travel, fish and play tennis. Recently I’ve taken up coaching other entrepreneurs. I’m trying to give back to the business community.
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