According to TerraCRG’s Brooklyn Commercial Market Report, Development activity based on dollar volume for 2012 jumped 221% year-over-year and multi-family jumped 54% as providers of supply begin to respond to improving demand.
The East and North Brooklyn regions plus DowntownPark Slope saw the heaviest volume. Here are some insights presented in the report:
2012 Was Peak, Commercial Activity to Level Off in 2013
We believe development site sales activity peaked last year and as a result, most shovel-ready sites have been purchased and are now being built mostly as rentals. This means land-sale activity will level off in 2013, mainly due of lack of inventory. This, in turn, will put upwards pressure on pricing of well-situated residential development sites. At the same time, we expect to see more assemblages of existing tear-downs and an increase of large trades of commercially-zoned lots that developers will try to bring through the rezoning or variance process. By the end of this year, developers will break ground on large condo projects again.
Brooklyn Transitions from Affordable Manhattan Alternative to Destination
Multifamily sales are expected to continue to show strengths and we expect volume to increase in 2013 as institutional owners and large portfolio owners try to take advantage of the low yield expectation and bring large portfolios to market before the low interest rate environment changes. Brooklyn’s strong market fundamentals mean residential rents in core and transitional neighborhoods will continue to increase aggressively as more residents call Brooklyn their home. To these new residents, Brooklyn is no longer a more affordable alternative to Manhattan, it’s a destination. This upside opportunity will attract investors that so far concentrated their efforts on Manhattan to buy multifamily buildings in Brooklyn.