Is Downtown Brooklyn’s rental boom about to turn into a glut?
Google Earth rendering of the new residential buildings going up in Downtown Brooklyn, via CityRealty.com
This time last year, 6sqft shared a report from CityRealty.com that detailed how Northern Brooklyn would be getting a staggering 22,000 new apartments over the next four years, with the majority, 29 percent or roughly 6,500 apartments, headed for Downtown Brooklyn. The trend has kept up, as the Times reports today that this number of units is concentrated among “19 residential towers either under construction or recently completed along the 10-block section of Flatbush stretching from Barclays Center north to Myrtle Avenue.” Another 1,000 units are coming to four buildings on Myrtle Avenue, and all of these are overwhelmingly rentals. In fact, 20 percent of the entire city’s rentals that will become available this year and next are in the neighborhood. But many believe this rental boom is fast approaching a glut that will cause prices to soften in a saturated market.
7 DeKalb Avenue
The boom can be attributed to several factors, one of which is the 2004 rezoning of Downtown Brooklyn that encouraged new office tower and residential development. This took a while to gain speed, but it all changed once the city spearheaded a Downtown Brooklyn Cultural District centered around the Brooklyn Academy of Music and once the Barclays Center and surrounding Pacific Park took shape. There’s also the fact that this neighborhood has one of the largest transit hubs in the city, and it received much of the overflow of those priced out of Williamsburg.
The Ashland © FXFOWLE Architects
Already, some of the neighborhood’s largest developments are offering up rental concessions. At 7 DeKalb, a 23-story building above the City Point complex, the landlord is giving two months free rent for 14-month leases and free use of the gym and other amenities for a year. And at The Ashland, a 53-story, 586-unit tower near BAM with a ground-floor food hall and slew of other amenities, there’s an offer for one or two months of free rent depending on the lease length. Other buildings providing similar deals include 300 Ashland (no fees), The Giovanni (a month free), and City Tower (also a month free). Gabby Warshawer, CityRealty.com’s director of research, noted that this trend is “pretty astonishing.” She said, “Clearly there’s a lot of supply right now. We’re seeing longer lease terms, which is fairly new. And months of free rent.”
300 Ashland © TEN Arquitectos
In terms of the glut, Jonathan J. Miller, president of real estate appraisal and consulting firm Miller Samuel, explains that the issue is “too many units skewed to the upper end of the market,” meaning those above $3,500 a month. “The top of the market is soft for both rentals and condos. That’s where the bulk of the new supply is coming.” When he studied Brooklyn rents, he found that median rents for entry-level apartments jumped 50 percent to $2,481 from 2009 to 2016, but the high-end market fell four percent to $4,783.