The slowdown in the high end luxury condo market maybe seeping into another real estate market as well—Brooklyn rentals. Much like the saturation of tall towers on 57th Street contributed to the slowdown in the luxury market, the glut of rental buildings, particularly in Downtown Brooklyn maybe a sign that the borough’s rental boom might be cooling off for now, the New York Times reports.
The 10-block stretch along Flatbush Avenue between the Barclays Center and Myrtle Avenue has 19 apartment buildings that are either under construction or have just been completed, and together they have an offering of 6,500 units, most of which are rentals.
The indication of the slowdown, according to the Times’s reporting, comes from the various developers behind these towers offering discounts and other incentives to tenants to sign leases. City Point’s 7 Dekalb Avenue, is offering two months free rent on a 14-month lease, and access to the building’s amenities free of cost for a year. Two Trees Management is also offering two months free at its 53-story tower at 300 Ashland Place. With those concessions, a one-bedroom at 7 Dekalb would cost $3,428 per month, and a one-bedroom at 300 Ashland would cost $3,375. Several other buildings in the neighborhood are offering similar discounts.
Real estate guru Jonathan Miller, the CEO of the appraisal firm Miller Samuel, however thinks it has less to do with the number of units as much as it has to do with high-end units with most asking for over $3,500 per month, he told the Times.
A study he conducted on Brooklyn rents showed that median rents on entry-level apartments had soared 50 percent from 2009 to 2016 to $2,481, but on high-end units the median had come down four percent to $4,783.
A Wall Street Journal investigation from last fall had hinted at this same kind of "softening" of the market, and these series of discounts seem to be a pointer in that direction. While Downtown Brooklyn might be the focal point of the glut, Brooklyn overall is expected to gain over 6,000 apartments this year—that’s more new construction than anywhere else in the country.
However with the expiration of 421-a some developers expressed relief that there would be almost no new construction in 2018. That however does not solve the problem of affordable housing, and many housing advocates complain that there just isn’t enough. About a quarter of all the new units being built will be affordable—that’s over 1,600 apartments, but advocates contend that many will still be out of reach for low-income residents in the neighborhood. They’re also concerned that the neighborhood’s infrastructure won’t be able to cope with the influx of people moving in.
The managing director of real estate for the Downtown Brooklyn Partnership, Alan Washington, issued the following statement to Curbed:
The demand for housing in Downtown Brooklyn remains strong. Our existing residential buildings are at 95 percent capacity, and those coming online are experiencing strong demand. To us, this comes as no surprise, as job growth in the borough continues to outpace the city overall. The neighborhood's historically low commercial vacancy rate, three percent, makes clear: Downtown Brooklyn is a place companies want to be -- and residential demand will continue to reflect the need to house a booming workforce that wants to live close to work.