As New Yorkers Increasingly Crave More Space For Less, Real Estate Leaders Are Bullish On Brooklyn
As residents exit Manhattan in droves, many making the transition from their Midtown and Downtown offices to home offices outside the city, real estate players say neighboring Brooklyn will be a benefactor of the cultural and geographic changes prompted by the coronavirus pandemic.
People are looking for more space at a lower rent, and new commercial development on the horizon in several parts of Brooklyn could provide that, leading developers and industry leaders to say they are bullish on the future of the borough.
“Brooklyn was once an independent city, it was built to be an independent city,” New York Building Congress President and CEO Carlo Scissura said on a Bisnow webinar about the Brooklyn market. “I think as people are looking at the evolving nature of cities and what they want out of where they live, the borough continues to have that.”
One of the key things Brooklyn has is a variety of residential options close to key transit lines.
“You can have a high-rise downtown, you can live off the water in a building, you can live in a brownstone,” Scissura said. “You can live in a big house with a backyard and a swimming pool — lots of people don’t realize that. You can live in a Victorian home that was built in the 1800s.”
The multifamily market in Brooklyn has fared far better than that of Manhattan over the past eight months. Manhattan rents have plummeted as residents there have left and huge amounts of excess supply have come on the market.
Brokers and market experts have told Bisnow over the past few months that overall, there is more interest in the Brooklyn residential market.
“The opportunity in Manhattan, it’s not in sync with the region, and you are seeing that in the rental market [most immediately] simply because the rental market is more responsive to changes in the economy than the purchase market,” Jonathan Miller, CEO and president of real estate appraisal firm Miller Samuel, told Bisnow in September.
In June, when the city began to awaken from its shutdown, residential purchase transactions in Brooklyn skyrocketed by over 100%, Miller said. The speakers on last week's panels said there is an increased interest in what Brooklyn has to offer in terms of living space.
“When I’ve spoken to a lot of people recently, when they’re moving back to the city the discussion of Manhattan versus Brooklyn is real and it’s continuing,” Lakevision Capital East Senior Vice President of Investments Tyrone Barnes said. “I think some of the retail and other options about Brooklyn make it very attractive to people that may not have moved here before. They are now considering it.”
However, both boroughs have seen significant declines in rent. In September and October alone, monthly rent in Manhattan dropped 1.91% from $3,612 per month to $3,543 per month, according to data compiled by real estate firm MNS. This is down 14.56% year-over-year, from $4,147 per month in October 2019.
Still, the speakers say commercial development, including projects in East New York and Gowanus, make them optimistic about the borough’s continued success in the future.
“It’s not news that Brooklyn has become a brand, a lifestyle internationally,” Two Trees Management principal Bonnie Campbell said. “But I think these assets have been amplified in this economic climate.”
With most of the city’s office employees working from home and in-person learning suspended in public schools, residential renters and buyers want more space for less, she said.
“More space is what people need right now with their kids running under their feet and we’re not just talking about more space,” Campbell said. “We’re talking about best-in-class housing that is comparable to Manhattan. You don’t have to give something up to get something in Brooklyn.”
In addition, changes to the city ushered in by the pandemic have elevated the appeal of the borough, the speakers said, particularly outdoor dining, which has had more success in the city’s outer boroughs.
“The outdoor dining — really — if you came to Bay Ridge this summer, you would have thought you were in Europe,” Scissura said. “It was incredible, it helped businesses survive, it kept communities together, it showed people why you live in neighborhoods like this one.”
As the pandemic continues to accelerate the population’s relationship with cities and density, Scissura said, Brooklyn will be the borough to watch.
“I think as people are looking at the evolving nature of cities and what they want out of where they live, the borough continues to have that,” he said.