What Will Determine The Next Brooklyn Gold Mine
Brooklyn’s development boom has mainly centered around Williamsburg and Dumbo, but with these markets now matching (or outpacing) Manhattan rents, the industry’s finding that it needs to look elsewhere for the next gold mine. That will be on everyone's mind at Bisnow's Brooklyn New Frontiers event later this month.
The panelists on the event, which will be held at the William Vale Hotel on Aug. 17, have a long list of potential Williamsburg wannabes (Bushwick, Ridgewood, Sunset Park, Coney Island, etc.), but warn that success is dependent on several uncertain factors that could make huge differences.
The biggest question mark hanging over the borough’s head, for example, is the closing of the L line in 2019, which will make life much harder for the 375,000 people who travel between Brooklyn and Manhattan every day.
While Meridian Capital Group senior executive managing director David Schechtman (pictured) believes the worrying is “intergalactically overblown” and the situation could be fixed with better bus lines, Hornig Capital Partners managing partner Daren Hornig believes the repairs could have a huge impact.
With easy access to Manhattan hampered, Daren (pictured) explains, internal development could be catalyzed and commercial properties in neighborhoods like Bushwick will get huge value boosts as Brooklyn residents realize they have everything they need in their own borough.
The effect of the Red Hook Ferry line is debatable. Schechtman says that while the neighborhood's more likely to boom, it needs more infrastructure improvements before it could be seriously considered as something to watch.
With any of these neighborhoods, however, the panelists noted that gentrification and affordability debates rear their head. Could resistance increase as developers move east and Brooklyn’s status as a bastion of affordability becomes questionable?
Schechtman sympathizes with the resistors, arguing that trying to bring Williamsburg-style free market condos to poverty-line neighborhoods like East New York wouldn’t only be doomed to fail, but would be “just unnatural.”
The only acceptable way to bring development to tougher neighborhoods, he says, is for the city government to provide “quid pro quo incentives,” such as tax incentives and development rights in exchange for new schools, senior care centers and infrastructure.
Slate Property Group principal David Schwartz (pictured) agreed, but from a more financial point of view. While transformations are certainly part of Brooklyn’s history, he says, it doesn't make business sense to remove the “authenticity, history and fabric” that make the borough appealing.
So looking at any new neighborhoods, the two argue, requires communication with the community and careful thought of what needs to be preserved. Boaz, Daren and Red Apple Group CEO John Catsimatidis (pictured) all touted the importance of communicating with community leaders to not only learn what a neighborhood's identity is, but also to avoid resistance.
But the most important thing to remember, Cushman & Wakefield director Winfield Clifford (pictured, center) points out, is that while the market has retained its fervor, investor sentiment has grown more cautious, and more conservative underwriting has become more common. In addition, he says there's been a noticeable tightening in construction loans and drop in land sales.
Without city incentives or initiatives, he argues, investors won’t be interested in any new neighborhoods, and economic development could stall. While some initiatives—like Bill de Blasio’s promise to provide housing to East New York—have been accepted with open arms, developers and investors need to expand intelligently.
Simply put, there are many neighborhoods that could be the next Williamsburg or Dumbo, but all these factors will determine what booms and when.