Welcome to the newest New York Real Estate Update from Brooklyn Made.
This is episode is brought to you by our sponsors The Ratner Team and Spartan Renovations. The Ratner Team are your local New York real estate experts for buying, selling, leasing and investing in property in the Big Apple.
Spartan Renovations is a leading NYC firm specializing in architectural and engineering design, project design and management and general contracting services.
This month we’ve seen bigger real estate moves in play, and see developers marching on with new projects that will continue to change the skyline and living trends over the next few years. Yet, the data continues to show the market is changing.
In the commercial real estate headlines…
So right into what we all really want to know – what’s going on with the real estate market?
While financiers still seem to be bullish on providing big funding for New York real estate projects, developers just seem to keep going and renters haven’t seen a massive windfall of truly affordable units yet, the data continues to suggest the market has plateaued.
Rents may still be strong for multifamily landlords and there may be pockets of greater New York City with plenty of room to grow, it may no longer be a matter of when the market pops again, but how low it will go, and of course, how to make money in the meantime.
According to coverage by CNBC, the Manhattan property market has already been in a correction for over a year. Some will stay say this is nothing like 2009. Yet, in the last quarter alone the Manhattan luxury real estate market has seen sales prices drop by 12%, while inventory grew 27%. New development sales fell 22%. Mortgage rates are rising, affordability is an issue, mortgage fraud is up, and many have been speculating. Are there really many more missing pieces required before some Realtors admit the market has turned and looks a lot more like the last bubble than anyone has been saying? If prices can fall 12% a quarter when most still have their bullish blinders on, how far might it slide when people actually get scared?
Of course, there will always be opportunities to make money in the market and room for innovation. Though many may be wise to restructure their portfolios now. Those that do this well, may be really grateful, and experience a lot of relief with where prices are over the next 12 months.
Among those willing to step up and make bets on New York City’s Market are BuzzFeed. The click-bait website is making its own play in retail, with toy store and selfie space covering 11,000 square feet, plus basement, with an asking rent of $300 per square foot. The store dubbed ‘Camp’ will be situated in the Flatiron District at 110 Fifth Ave. Look out for more Flatiron development news coming up in this month’s New York real estate report.
Investors who are considering cashing out of mature investments have an estimated $6 trillion to reinvest in capital gains right now. To avoid the big tax hit on those gains, many are being drawn to the new breaks being offered for investing in real estate in new ‘Opportunity Zones’. The Treasury Secretary estimates $100 billion in the capital will make it into the market. With some of these new reinvestment zones being in New York.
If you’d like more development in your neighborhood, you might just get picked for one of the new jails designed to replace Rikers. While no one thinks Rikers is a good place, there don’t seem to be many hands in the air, excited about building one of these new facilities next door to their homes. Even despite the fact that some plans call to combine retail shopping and rental apartments with new jail detention centers. What do you think about this? How crazy or genius do you think these plans are? Let us know on Facebook!
A slightly less controversial and more welcome development on the New York landscape are the new plans for the JFK airport. The new $13 billion makeover that is to get underway in 2020 will add two new terminals and tens of thousands of square feet of retail shopping space.
While all this public spending certainly isn’t doing wonders for our property tax bills and housing affordability, there continue to be new developments marketing themselves as more affordable options for renters. The 125 unit, 8 story complex in Brownsville, Brooklyn aims to split units between low-income residents and the formerly homeless, with rents starting as low as $462 per month. It will include recreational space, retail and green building features.
New York City is also in the process of rolling out its new consolidated housing rental voucher system. The goal is to simplify and hopefully bring some clarity for landlords and potential tenants. Unfortunately, in the process, many who had been receiving subsidies will be on their own to cover the rent as of 2019.
Sadly, no matter how much or little you have to spend on housing in New York, finding a safe and healthy place can be a challenge. 5 individuals were just indicted by the Brooklyn DA for covering up the presence of asbestos in luxury units. They face 61 criminal charges.
Though if you are a New York City real estate investor, and have a few dollars to throw down on a new pad, you might want to take a look at Anthony Bourdain’s Upper East Side apartment. Now on the market for $3.7 million, the 5 bedroom, 3 bathroom unit is just a block from Central Park, and obviously includes a well equipped chef’s kitchen.
For Brooklyn Real Estate News
First some sad news for Brooklyn. Williamsburg business owners and retail landlords are reporting an early hit from the L train shutdown fiasco. Many report consumer sales are down 10% to 15%, with rents the following suit. That could lead to more retail vacancies until the construction is finished.
Of course, there could be a healthy rebound when the L line work is complete, but a lot will depend on what’s left then, and how much capital everyone has to execute on their desire to revive the area and move in.
If the L train shutdown wasn’t enough of a pain for tourists and commuters between Manhattan and Brooklyn, a new contract has just been issued for a construction project on the Manhattan Bridge. The $80 million renovations scheduled by the New York City Department of Transportation will tackle cosmetic and structural repairs on the almost 110-year-old bridge that connected Downtown Brooklyn to Lower Manhattan. The work is expected to run through 2021. It’s not sure how travel may be impacted, though 340,000 transport riders, 4,000 bikers, and 85,000 vehicles use the bridge on the average weekday.
The rehabilitation of the Brooklyn Queens Expressway (BQE) could also result in the temporary closure of the Brooklyn Heights Promenade. That proposal has been unpopular with locals. Though many didn’t want it when it was first opened 68 years ago.
Developers are pushing for new zoning amendments to build a residential building on Summit Street, in the Columbia Street Waterfront District. While it should be a welcome addition to the neighborhood, some are worried it will open up more development.
Over at Pacific Park, Brooklyn’s mega-project is moving ahead with a new tower. Altogether the project is expected to deliver 6,430 new housing units to the neighborhood, plus retail and office. Work on the tallest building is scheduled to begin in 2019 and will rise to over 500 feet high.
80 Flatbush received its approval to go ahead. In addition to residential apartments, the development also brings office space and two new schools to the neighborhood.
One of the most severe hangovers from 2008 has been big building sites that needed major redevelopment.Greenpoint is finally tackling one of its own with a bold project to convert an abandoned hospital into a variety of new housing. Among the renovations will be adding hundreds of apartments, a shelter, workforce development center 109 senior housing units, housing for the formerly homeless and a community center.
In other boroughs
Despite some negativity around retail earlier this year, Brookfield is on a mission to revive the sector with new experimentation and investment. It is currently taking on a “Love Bleecker,” campaign to make Bleecker Street’s storefronts “the most interesting urban shopping street in the world.”
FiDi’s tall building boom continues with the construction of the crane for 77 Greenwich Street. The building will incorporate condominiums and a grade school.
At almost 500 feet tall, Trinity Church’s office tower at 74 Trinity Place is getting its own makeover, with a new bronze facade.
WeWork continues its big moves with the leasing of an entire building in the Flatiron District for its HQ by WeWork product. WeWork is now the largest office tenant in London, DC and New York. More additions to WeWork’s portfolio include locations in NoMad and Soho.
The Bronx is stepping up too, with multiple new projects filing for permits over the past month. While Queens is enjoying new record high property prices. Perhaps fastest growing fastest of all is Long Island City, which is in the process of getting a new waterfront innovation center.
For Landlords and Investors
Leasing specials have been greatly responsible for helping New York City landlords speedily lease vacant units, and keep up rental rates. It’s very important for investors to be alert to competitors deals.
Among those on the market now are:
According to Curbed, your 10 biggest competitors and largest NYC landlords are:
Airbnb is trying to fight back against a new law passed by the City of New York demanding that under the new Homesharing Surveillance Ordinance, services like Airbnb must hand over extensive amounts of data about its users, and in particular landlords. Failure of these companies to disclose any individual listings can lead to big fines for each offense.
It has been a busy year in the New York real estate market already. Big players, buyers, and developers haven’t been shy. In fact, we continue to see a run of aggressive new projects coming onto the market, some with even larger price tags. Brooklyn continues to be one of the biggest beneficiaries of this action and is receiving much of the investment capital. Rents have been blown around by a variety of factors, though have been kept up by attractive leasing deals. Inventory may be growing, though there are many economic factors which could impact the direction of the market through the end of the year.
Well, that’s it for this month’s roundup. 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.
Thanks again to our sponsors, The Ratner Team, and SpartanRenovations.com for making these reports and delivering this valuable information possible!
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.