The New Coney Island - Brooklyn's Times Square by the Sea

Saturday, July 26, 2014

The Brooklyn real estate boom

NY Post excerpt-

“In Manhattan, land costs are higher than the costs to build a building,” says Stern. “In Brooklyn, that’s not the case — there’s quite a bit of room for growth. And there are a large crop of people who are choosing to live in Brooklyn as their first choice.”

Which definitely helps explain why developers have been so focused on Brooklyn. But something else is driving the trend towards condos instead of more rentals — and that is the explosion in land prices.

“In the last 18 months, asking prices have gone from $75 to $350 per square foot,” says Tucker Reed, president of Downtown Brooklyn Partnership. “That’s in the space of 18 months. That’s unheard of. And that makes rental development difficult. … That’s why developers have turned continuously towards condo.”

Gabriel Saffioti, a director at the investment sales brokerage firm Eastern Consolidated, is currently marketing a parcel of land at 295-309 Schermerhorn St. in the mid-to-high $50 million range, which comes out to around $400 per square foot of buildable space. “We’ve had people who have looked at it from a hotel, a rental and a condo perspective,” Saffioti says.

Plus, all of the commercial and retail development in the works is only going to make the area more attractive for buyers.

City Point, for instance, the 1.9 million-square-foot complex (of rental and retail) which will be released in phases and completed in 2020, promises 700,000 square feet of retail, including an Alamo Drafthouse theater and a CityTarget.

“There’s been significant growth in retail in last 7 years, but we still think there’s a tremendous gap,” says Paul Travis, managing partner of Washington Square Partners, which is developing City Point. As for future commercial tenants, “It’s going to be very Brooklyn.” By that he means artisan and local.

Collectively all this development has attracted the kind of buyer who never before would have considered Downtown Brooklyn.

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