Brooklyn’s Next Hot Rental Development Markets Are Its Overlooked Waterfronts
Brooklyn’s most transit-rich neighborhoods, like Williamsburg, Boerum Hill and Downtown Brooklyn, have long been some of its most popular. But as developers seek out workable sites to build on, some are increasingly betting on the borough’s less-utilized waterfront neighborhoods.
“I can't say enough how impressed I am with areas like Sheepshead Bay and Coney Island, I still think there's tremendous opportunity there,” Stephen Kliegerman, president at Brown Harris Stevens Development Marketing, said on stage at Bisnow’s Brooklyn State of the Market event last week. “I don't think New York, frankly, has ever really taken proper advantage of its waterfront.”
Residential developers — both for rental housing and condo properties — are increasingly interested in some of South Brooklyn’s waterfront neighborhoods, industry players said at the event. They are hopeful that New York City will furnish public space improvements in those areas via public-private partnerships akin to Brooklyn Bridge Park.
“I think the waterfront in New York [...] has been underutilized,” Scott Alper, Witkoff Group’s president and chief investment officer, said on stage at 25 Kent in Williamsburg. “I think the redevelopment and development of the waterfront in these boroughs is really the next front of development.”
Those developments are already taking place, Alper and Kliegerman said — look no further than Rybak Development’s half a dozen multifamily projects in South Brooklyn’s waterfront neighborhoods.
The developer, led by founder Sergey Rybak, has been in the neighborhood for a while, completing three Sheepshead Bay projects that are small compared to some of its current undertakings — the 40-unit 3041 Ocean Ave., 51-unit 104 West End Ave. and 59-unit 1821 Emmons Ave. — by the end of 2017.
Rybak also wrapped up two Coney Island condo developments at the end of 2020, the 112-unit 221 Sea Breeze Ave. and the 60-unit 2633 Ocean Ave, where the developer said he is seeing increased demand from renters who weren't already in the neighborhood.
“Prior to Covid, and maybe during Covid, 50% of the renters were local. It's now down to 35%,” Rybak said. “I feel like, especially the area that we built in, is really starting to draw people. They want more space, they want more greenery, they want more amenities, they're OK spending an extra few minutes getting on the subway to go to the city.”
Coney Island became one of the most sought-after neighborhoods in the immediate aftermath of the pandemic’s arrival, according to data from Placer.ai. Between November 2019 and October 2022, Coney Island was the neighborhood in the borough with the biggest population increase, growing by 6%.
Now, Rybak is hoping to capitalize on that demand through even larger developments in the area: The Bay, a 198-unit multifamily property at 2971 Shell Road in Coney Island, is slated for completion in Q3 2024, while the 499-unit Sky 3 multifamily building — 22 stories at 532 Neptune Ave. — is expected to wrap up by the end of 2025.
"We don't feel Brooklyn has a large city presence," said Rybak, whose firm is also working on a 139K SF building on Neptune Avenue that will house a school and a community facility. "I think there are people in Brooklyn that live, work, play in Brooklyn. That is the target audience that we're chasing."
Other developments unfolding in the neighborhood are picking up steam, too. Last week, affordable housing developer Tredway purchased 2930 West 30th St., an 818-unit development spanning three buildings in Coney Island, from Arker Cos. for $150M. Construction is underway at BFC Partners’ 367-unit 1607 Surf Ave., which is due to deliver next summer, and DA Luigi Realty started excavation on its 1323 Surf Ave. development in April.
The rush toward Coney Island isn't limited to residential developments. Earlier this year, PYE Developments also started work on renovating the almost century-old Coney Island Shore Theater into a hotel with ground-floor retail space. And bigger things could be on the way: The Brooklyn neighborhood is one of the sites where developers are angling for a casino license, with Thor Equities’ proposal to build a casino, hotel, museums, a roller coaster and an indoor water park on 5 acres between Stillwell Avenue, West 12th Street, Surf Avenue and Wonder Wheel Way.
The area's transaction activity shows that investors are buying into its potential. Of the 96 commercial sales in Brooklyn in 2022, just six took place in prime neighborhoods such as Williamsburg, Greenpoint and Downtown Brooklyn, according to Ariel Property Advisors' investment sales report.
All other sales were in Central and South Brooklyn, “with Sheepshead Bay and Borough Park leading the way” and mom-and-pop retail in low-density neighborhoods driving activity, Ariel’s report found. But the region also captured some of the borough’s largest transactions in 2022, including the Chetrit Group's $34M sale of 1100 Kings Highway and 2067 Coney Island Ave. in December last year.
Red Hook is another neighborhood poised for takeoff, industry experts said on stage. The neighborhood has been one that the New York City Economic Development Corp., which manages 64M SF of real estate in NYC across roughly 230 properties, has been focusing on, NYCEDC Senior Vice President for Asset Management Sabrina Lippman said at Bisnow's event.
The NYCEDC recently inked a deal with MSC Cruises, which will see a cruise ship docking at the Brooklyn Cruise Terminal every Sunday through 2025, Lippman said. The Brooklyn Cruise Terminal has seen a passenger increase of more than 20% in recent times, she added, while the NYCEDC is positioning Red Hook Container Terminal as a potential micro-freight transportation point for products coming from New Jersey, Manhattan and other parts of New York.
“We're in conversations with Amazon, we’re in conversations with UPS to use things like the Red Hook Container Terminal, and really identify all throughout the waterfront an opportunity for micro-freight distribution,” Lippman said.
Part of how NYCEDC is thinking about revamping the area is through improving South Brooklyn’s transportation connections, industrial facilities and public spaces, Lippman said.
“One of the things that we're trying to think about is, how do you utilize the waterways to take off traffic from our streets, as we start to look at pedestrian safety, expanding public space, improving our streetscapes?” she said. “Our ferry system is robust here in Brooklyn. It's only grown in terms of lines and service and access. So our waterway is probably one of the most precious jewels we have in Brooklyn.”
Private commercial development is beginning to trickle into Red Hook: Vanta Developers is building a 300K SF film production studio designed by the Bjarke Ingels Group at 744 Clinton St. But the NYCEDC has its sights set on a bigger picture, hoping its push into Red Hook can accomplish what private-public partnerships managed to do in Williamsburg.
Regina Myers, president of the Downtown Brooklyn Partnership, hopes for the same outcome in Downtown Brooklyn — and in Gowanus, where rezoning has spurred a range of new multifamily and commercial developments.
“I had the very, very specific, amazing opportunity to build Brooklyn Bridge Park, and our general project plan included a public-private partnership for maintenance — not only of the landscaping infrastructure, but also the maritime infrastructure,” Myers said. Projects that were put in place during that partnership are now funding waterfront maintenance and the upkeep of the public park, she added.
Still, more transportation infrastructure work and public space development likely needs to happen before some of South Brooklyn’s waterfront neighborhoods generate the same appeal as places like DUMBO and Greenpoint, Herrick Feinstein partner Mitch Korbey said.
“We saw a great flourishing of activity during the pandemic, with Domino Park and other places being so very popular,” he said. “We have this remarkable jewel of a waterfront, and yet, it's somewhat disconnected, and still industrial in pockets.”