Welcome to the newest New York Real Estate Update from Brooklyn Made.
This month’s roundup shows a New York City real estate market that just keeps marching on. It’s redeveloping and upgrading every day. New condo prices, the completion of new projects in Brooklyn all seem to be great highlights.
Keep listening to get the scoop on all of this, the most notable news this month and what it means for landlords and investors.
In the commercial real estate headlines…
WeWork’s failure has already cost investors billions of dollars. Softbank alone has had to write off $5B already, and even deeper cuts are likely to come as it unravels. Unfortunately, the company with great aspirations just got too big too fast and maybe a victim of its own success and lack of a sustainable business model. This sadly doesn’t bode well for others in this space like Airbnb. Of course, its CEO Adam Neuman is still making out quite well from the deal. His termination package includes getting paid $1.7B to walk away, in addition to the $700M in stock he recently cashes out.
Real estate tech still continues to attract substantial investments. Appraisal startup Bowery Valuation just pulled in $8M in funding from Lightstone.
Billionaire real estate investor Sam Zell who recently predicted WeWork’s collapse now says new rent control laws are having a chilling effect on property development.
Blackstone just turned a $7B profit on the portfolio of office properties they bought from Sam Zell for $39B back in 2007. An amazing feat considering the intense crash that followed their historic record-setting purchase.
Still, the Real Deal reports that construction spending is expected to hit $190B within the next 24 months. However, even with continued growth, construction job growth is expected to peak within the next year, especially with new technologies that are replacing workers.
BisNow says that the game has officially changed for NYC landlords. Instead of it all being about location, location, location, success is now all about the product, product, product. It’s all about making the upgrades to compete with new construction. If you aren’t bringing your properties up to date leasing will be slow and rents will be low.
One of the hottest emerging spaces in commercial real estate leasing today is for film studios. At least for now, all the major media companies are vying for space to produce their own streaming content. We’ve seen Robert De Niro fund new studio spaces and Netflix on a land grab. Apple TV reportedly has $6B to fund original content production. Eventually, we will probably see a major roll up and consolidation in this space as viewers get tired of paying for multiple streaming services. For now, landlords see these long leases from national credit tenants as a great thing.
In other news, NY has lost its lawsuit to repeal new SALT tax deduction caps. Along with NJ, MD and CT, NY saw its lawsuit shot down by a NY federal judge at the end of September. The new rules cut the average taxpayers’ SALT deductions by more than half each year, to just $10,000. All while taxes, and especially property taxes keep going up. This has forced many business owners and wealthy individuals out. All contributing to a 45% jump in empty storefrontsover the past decade. There are many options NY could use to reduce the tax burden and increase retention and appeal to new investors and businesses. Adding more taxes to turn off online retailers and businesses is probably one of the worst and most counterproductive.
NYC home sales have stalled out, but this is only fueling more competition for rentals. Street Easy reports this has created the fastest pace of rent growth since 2016. NW Brooklyn rents are up another 3.5% to $3,115 on average. Even submarkets are seeing rents up to $100 a year over year. It’s a trend likely to continue as buyers hold off to see where the bottom of the market will land.
2 Hudson Yards penthouses have just listed for $59M, making them the most expensive sold below 42nd, if they achieve their asking prices. The supertall building designed by Skidmore, Owings & Merrill will also have an Equinox hotel and office space.
For Brooklyn Real Estate News
Brooklyn is getting a giant new welcome sign. Replacing the old watchtower sign at 30 Columbia Heights, the new welcome sign has finally received permit approval and aims to attract visitors and new businesses.
As a part of the $2.5B master-planned development at the Brooklyn Navy Yard, Dock 72 is debuting its 16 story office building. It will include film studio space and other tenants. What will happen to the space dedicated to the now failed WeWork in the building is unclear.
Fort Greene could be getting a new 24 story apartment tower and music school. The Gotham Organization has announced plans for this proposed new development in the BAM historic district, not far from the borough’s new tallest tower.
In other boroughs
Queen’s Skyline Tower has set the borough’s record for the most in anticipated gross sales, at over $1B. The tower topped out at 778 feet and is home to 802 residential units.
Floundering developer Extell has come up with a new idea to move the 80% of its units that have gone unsold. One Manhattan Square on the LES has announced a rent to buy the program, which lets prospects test drive units for a full year.
400 bus stops in the Bronx are being axed as a new redesign plan goes into play. Investors may find this a mix of pain and new opportunities.
You can now buy tickets to the Hudson Yards 1,100 foot high observation deck to check out the views.
It’s no secret that Manhattan retail rents have been falling for the last couple of years, and many retailers have been resizing.
However, no retailers are bucking the trend. Apple is reopening its flagship store. Nordstrom is opening a massive store in Midtown
While there continues to be some concern over the amount of unsold condo inventory, developers keep coming up with new deals. Residential rents seem strong.
There is concern and frustration over new rent regulations and even more over increasing taxes which seem to be having a negative impact. Though the view from the top still looks great, and major retailers could be poised to turn things around.
Make sure you’ve checked out our new special episode on Brooklyn Startups too.
Well, that’s it for this month’s round-up. Look out for our other upcoming reports, and check out the latest data on the Manhattan and Brooklyn residential and multi-family market, and which features and neighborhoods are yielding the best rents at NewYorkMarketReports.com.
Make sure you like and share this report, and leave your comments on this news, or any trends you think we overlooked or you want to hear more about in the comments section.