In a recent Brooklyn 2013 Year-End Sales Report, Ariel Property Advisors presented an overview of market activity to Community Board 8.The report shows that there is a strong sense of optimism borough-wide amongst developers for both rentals and condominiums. Prices in these neighborhoods of Brooklyn have reached all-time highs as demand continues to outpace supply.
Investors are seeing value in properties with rents that are significantly below market with the potential opportunity to turnover units and raise the building’s income.
It was found that in 2013, there were more investment property transactions in Bedford-Stuyvesant, Prospect Heights, Crown Heights, and Prospect Lefferts Gardens than in any other area of Brooklyn. In these four neighborhoods combined, transactions increased 50 percent, to 188 in 2013 from 2012, and the dollar volume of those trades jumped 70 percent to $506 million, according to the report. Multifamily property sales (brownstones) accounted for 78 percent of the total transactions (147)— a 65 percent increase over 2012, and a 172 percent increase since 2011.Additionally, investors are seeing value in properties with rents that are significantly below market with the potential opportunity to turnover units and raise the building’s income. The second strongest asset class in this area in 2013 was comprised of development, industrial, and garage properties, which yielded 33 transactions, or 17.5 percent of the total investment properties sold. Funding for new development is readily available, and prices have almost doubled in the past 24 months. In some areas of Prospect Heights, land values have risen above $300 per buildable square foot, while in Bedford Stuyvesant land has traded at above $180 per buildable square foot. In neighborhoods such as Crown Heights and Bed-Stuy, scarce vacancies continue to drive up rents, as people seek an affordable alternative to Manhattan. This trend is fueling a tremendous appetite for development sites throughout Brooklyn with many new projects targeting young urban professionals who are new to the borough. “The impressive year-over-year gains in transactions, dollar volume, and pricing in the first quarter continued the trend we saw in the latter part of 2013 when large institutional deals dominated sales activity,” said Shimon Shkury, president of Ariel Property Advisors. “Our firm’s contract signings and bidding activity indicate that this trend will continue.” Ariel Property Advisors is a New York City investment property sales firm with an expertise in the multifamily market. The firm also produces a number of research reports including the Multifamily Month in Review. For more information see arielpa.com.