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Downtown Brooklyn’s rental glut is officially here

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What happens when oversupply and a softening rental market mix?

Real estate prognosticators have been warning of Downtown Brooklyn’s rental glut for quite some time now, and it seems that those predictions are, at last, coming true. With several new buildings bringing hundreds of apartments to the rental market in just the past year—and more to come in 2017—”landlords are locked in a fight to fill their apartments,” according to the New York Times.

The Times looked at some of the biggest new rental towers in the neighborhood, including the Hub, Steiner NYC’s behemoth rising on Schermerhorn Street (it has 600 market-rate units), and the Ashland, Gotham Organization’s tower that has close to 600 units. The “abundant supply” is, unsurprisingly, leading developers and brokers to take desperate measures to entice renters—no broker fees, discounted rents, and other perks. (Doug Steiner, unsurprisingly, disagrees with this characterization, telling the Times that “the press has been unfair about a glut.”)

But the proof is in the pudding, so to speak: A quick StreetEasy search shows that there are currently 235 apartments for rent in Downtown Brooklyn (that’s just through the site, mind you), and of those, a good chunk are branded as “no fee”; ditto every unit at the Ashland and Two Trees’s 300 Ashland, both of which sit within the Brooklyn Cultural District (at the nexus of Downtown Brooklyn and Fort Greene). Others are advertising as much of two months of free rent.

One interesting tidbit: According to the Times, the affordable housing lottery for Hub, which launched in October, has received 80,000 applications for a grand total of 150 apartments. Those affordable units will go for $833/month for a studio, $895/month for one-bedrooms, and $1,082/month for two-bedrooms—suggesting that the issue isn’t necessarily a lack of demand, but the high cost of market-rate rentals. As the Times points out, a market-rate studio in the same building rents for close to $2,700/month, a price that may be out of reach for many New Yorkers.

“It gets to the point where you start to wonder, how many people are out there that can afford rents like this?” David Maundrell, the president of Aptsandlofts.com, told the Times.

And the situation is likely to get worse—for developers, anyway—in the coming months: Even more rentals are sprouting up throughout the neighborhood, including a 440-unit tower on Fleet Place developed by John Catsimatidis and TF Cornerstone’s hulking 700-unit (571 of which are market rate) building on Bond Street. While pricing for those has yet to be announced, it’s a good bet that they’ll face the same issues now plaguing the buildings that have already launched.