SEASONED investors have been developing in Brooklyn for years, but with development sites in top neighborhoods like Williamsburg and Brooklyn Heights reaching (and exceeding) $200 per buildable square foot, double the average for the rest of Brooklyn, market watchers wonder, how high can it get? Is the party over?
In my opinion, we’re just getting started. Williamsburg is the center of it all and it hasn’t even really begun yet. With money pouring in for acquisitions like 111 Kent from funds like American Realty Advisors (http://therealdeal.com/blog/2012/05/11/glucks-111-kent-avenue-sells-for-56m/) – a group that manages pension fund money, many of Brooklyn’s neighborhoods are becoming considered safe investments…a far cry from the mortgage market of two years ago where Brooklyn was considered a “declining neighborhood”. In the past two weeks alone, I’ve been contacted by investors, including funds, family offices and foreign entities inquiring about the best neighborhoods in which to invest. My answer is consistent: “It depends”.
From a residential standpoint, there are plenty of neighborhoods to look at, whether it’s the established ones like BK Heights, Williamsburg, Park Slope, DUMBO, Boerum Hill, Cobble Hill, and the list goes on. There are also safe bets among the less established neighborhoods, which can provide better returns when a project is done correctly. Bushwick (http://therealdeal.com/issues_articles/a-new-soho/) and Bedford Stuyvesant are often overlooked by investors and developers, but they offer cheaper land prices and rents that are competitive with more established areas.
From a commercial standpoint, I like Downtown Brooklyn for its retail opportunities. It’s impossible to even assign a value to what the retail will be worth in the blocks around Barclays Arena – the new home of The Brooklyn Nets. With people streaming in from all over the tri-state, it will not only establish that area as a viable retail hub, but it will also introduce a whole new crowd to the residential side of Brooklyn and set the neighborhoods that are around the Arena, like Park Slope and Prospect Heights on fire.
“Everyone’s very excited about the Atlantic Yards area, and it’s going to change the real estate economics in the area,” agrees Michael Falsetta, of Miller Cicero, LLC, a prominent NYC real estate advisory service. “But for more people, now it’s a first choice, especially people seeking townhouses and lower cost condos.”
The best way to predict the future is by understanding the past. For me, the current state of Brooklyn’s real estate climate is analogous to Plato’s allegory of the cave—we’re on the verge of being released from our limited knowledge As every type of real estate asset in the borough is rediscovered by homeowners, renters, investors and retailers, people are just starting to understand the value of Brooklyn. We are definitely on the verge of something big.