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Brooklyn Land Prices May Be Dropping, But Some See A Soft Landing Ahead

New York Land

It’s been a recurring question among players in the New York real estate market for years—how much higher can land prices really go?


As the city continues to ride a historic real estate boom and land reaches prices that would’ve been unthinkable in the last cycle, it’s got some developers taking a dim view of the future.

While Manhattan is its own beast as far as land prices are concerned, some think cracks are starting to show in Brooklyn as well, even in premier neighborhoods like Downtown Brooklyn and Greenpoint.

“I think land prices in Downtown Brooklyn peaked about six months ago,” Paul Travis, a managing partner at Washington Square Partners, said at a recent Bisnow event.

Matthew Baron, president of Simon Baron Development, says he sees land prices as being off by about 20% or 30% relative to the start of the year, a sentiment echoed by others.

Nonetheless, “you’re not necessarily seeing trades at those lower prices quite yet,” he says. “But if someone was asking 700 a foot maybe a year ago, I think you’d have bids coming in at roughly 30% below that today.”


One recent deal that did see a comparable drop was the sale of a 10-story building in Brooklyn Heights, part of the Jehovah’s Witnesses compound. Originally expected to sell for about $300M, the final price ended up being about 25% less.

Sales like that aren’t necessarily indicative of the wider market, says Andrew Sasson, a director at Eastern Consolidated.

“Those [Jehovah’s Witnesses sites] are so big,” Andrew (snapped above with Cayuga Capital Management's Jamie Wiseman) says. “If you’re looking at a million-square-foot site, that really narrows the field in terms of developers who know Brooklyn well enough to take a bet like that, and have the cash to back it up.”

“Most condo sites are about 200k SF by comparison," Andrew says, "and for sites like that I don’t think there’s any shortage of bidders.”

For now, smaller, 150k to 200k SF sites in Downtown Brooklyn have been holding steady at about $300/SF to $400/SF or so, he says. But if you did see a drop in condo-ready sites like that, it could be a major sign the market’s starting to soften after all.

Andrew thinks that’s unlikely in the near term. Unlike Manhattan’s ultra-luxe condo market, units in the $1M to $3M range like those being built in Downtown Brooklyn and elsewhere in the borough have “a bottomless supply of buyers.”


Timothy King (above), a managing partner at CPEX, says there’s so much momentum in Brooklyn—a slew of high-profile projects are in the pipeline all across the borough—that absent some kind of “9/11 event,” the market should remain fairly stable.

However, “it is likely prices have reached a plateau, for the time being,” he says. “I don’t think you’re going to see the kind of huge jumps we saw in the last few years anytime soon.”

He thinks Brooklyn’s newfound sense of confidence as a market unto itself, and not just Manhattan’s grimier cousin, is a trend that will keep the market chugging along for several years to come.

“Big real estate families, high-profile developers, all those folks who used to think you needed shots and a passport to leave Manhattan,” he says, “are now kickin’ the bricks, making offers and really making things happen in the borough. I don’t think that’s going away anytime soon.”

The lapse of the 421-a tax abatement has hit some areas fairly hard, and could put significant downward pressure on land in markets that rely on rentals, like Bed-Stuy, Bushwick, Kensington and others, says Sean Kelly, also a managing director at CPEX.

“Since 421-a went away, those are definitely the markets where we’ve seen the biggest slowdown, and that’s going to continue until 421-a comes back,” he says. That might not be such a bad thing—Sean says it might allow developers and lenders to catch their breath, and predicts they’ll remain patient until a replacement for 421-a is found.

“Real estate has always been a get-rich-slow business,” Tim says. While Brooklyn land prices might not grow at the same clip, “I don’t necessarily see them coming down either, because folks are buying into that market for the long term.”