GFI Realty Services released an eye-opening report regarding the state of the commercial and residential real estate markets in Brooklyn entitled Brooklyn: The Bridge to the Future. One highlight of the report is that “Brooklyn is leading the country in multifamily construction[.] [Approximately] 22,000 new apartments in large-scale buildings [are] slated to hit the market by 2019 (5,000 in 2016 vs. 2,700 in 2015).” That all sounds solid in theory— but it’s uncertain whether the demand for all these new undersized apartments will stay high.
In 2017 and 2018, over 4,000 units will flood the market in Williamsburg, Greenpoint, and Bushwick alone. Notable Bushwick developments include 810 Flushing, Cayuga Capital’s 600 Bushwick, and the infamous Rheingold Brewery development. Remember, all of these developments will open their doors years after Bushwick’s recent official downgrading by the New York Times.
Additionally, investors might be a little worried to see average rental prices dropping in both Bushwick and Greenpoint. Both neighborhoods saw a decrease in average rental prices of one percent from 2014 to 2015. The drop is admittedly not huge.
However, there are a lot of moving pieces in the equation. In 2015, according to the same report, sales prices in Bushwick were up by 22%—which might mean that landlords who overpaid for small buildings will try to jack up rental prices in a market where the vacancy rate will likely grow due to the new construction. At the same time, demand might also fall when plans for the L train’s repair finally solidify and are revealed to anxious commuters.
In keeping with these numbers, StreetEasy predicts an overall slowdown in sales prices in Brooklyn in a late February blog post.
All this possibly signifies the beginning of the end of Kings County’s insane real estate bubble—which is unlikely to affect hip and well-heeled residents who are already departing for the greener pastures of Ridgewood and Los Angeles, but could have major ramifications for the home values of long term denizens of the borough.
What do you make of this, readers?
Full disclosure: While this piece does not represent the opinions of any company with a vested interest in Brooklyn real estate, this reporter is a licensed real estate agent.