- Areas like Dumbo, Downtown Brooklyn, Fort Greene and Williamsburg averaged over $3,000 per month for a studio apartment in January.
- Businesses are making the move to Brooklyn in response to the residential popularity.
- For the most part, creative companies who employ a large chunk of employees that live in Brooklyn are filling these developments.
- Commercial development is even more vital as the upcoming L train shutdown could impact public transportation into Manhattan for up to three years.
Over the last decade, residential rates in Brooklyn experienced substantial growth, and it could be thanks to its influx of young people. In terms of income versus housing costs, Brooklyn is the most inflated market in the U.S., where average rent increased 1.5 percent in 2014, peaking at $2,716 last year. More recent reports from MNS show Brooklyn rent sitting at $2,717 — slightly higher than the 2015 high points.
It’s no secret Brooklyn has been a millennial hotspot in NYC, and median housing prices have responded accordingly to the borough’s popularity. While some of Brooklyn’s neighborhoods remain underdeveloped and remain under zoning proposals for affordable housing initiatives, areas like Dumbo, Downtown Brooklyn, Fort Greene and Williamsburg averaged over $3,000 per month for a studio apartment in January.
Businesses are making the move to Brooklyn in response to the residential popularity. Watchful developers are even changing plans from residential to commercial because office space vacancies in certain neighborhoods are low.
Currently, the most expensive overall asking price per square foot for rentals is in Dumbo at $63.14, followed by Williamsburg at $58.64. Downtown Brooklyn is third with an asking rent of $50.64 per square foot. Vacancies in the fourth quarter of 2015 were lowest in Downtown Brooklyn at 4 percent and highest in Williamsburg at 48.3 percent.
So who is filling these developments? Creative companies, for the most part, who employ a large chunk of employees that live in Brooklyn. At the end of last year, WeWork expanded their presence in the borough and subleased a 76,580-square-foot property at 195 Montague St.
Some new developments include 420 Albee Square, the first Class A office tower in Brooklyn complete with floor-to-ceiling glass, column-free floor plates and incomparable views of Manhattan and New York Harbor.
The building, developed by JEMB Realty, is 40 stories high, or 400,000 square feet. Originally, plans for the site included a multifamily tower but were later changed to office space due to low vacancy rates in the neighborhood, according to a statement from JLL.
“A number of recent noteworthy investment sales clearly demonstrated an ongoing increase in post-recession valuations in Brooklyn, and that trend will likely continue given the number of high-profile properties currently on the market,” said JLL Managing Director, Michael Shenot.
Similarly, Glacier Global Partners recently shifted proposals for 10 Jay St. in Dumbo from residential to commercial. The 196,516-square-foot projected structure is planned to for completion in late 2016.
While cutting down on the commute is a big benefit for Brooklyn’s workforce, commercial development is even more vital as the upcoming L train shutdown could impact public transportation into Manhattan for up to three years.
Eliminating the need for work-related travel into Manhattan by relocating small businesses into the same borough as the predominant percentage of its workforce makes sense for developers, especially now. For employees, real estate experts say Williamsburg rent prices may drop as much as 15 percent during construction, slated for late 2017.
“The diversity in scale of the projects and the broad diversity in target markets is a major indicator of the dramatic transformation occurring throughout the borough,” Shenot said.