Fort Greene’s sudden logjam of luxury rentals could cut into profits for some of the borough’s top rental developers, ending a price run that’s lasted years.
More than a decade after the neighborhood’s rezoning, there are 23 new residential buildings being built (or newly completed) along a 10-block stretch between the Barclays Center and Myrtle Avenue, plus another four building on Myrtle. Together, the buildings will add more than 7,500 apartments, according to the New York Times.
In fact, nearly 20 percent of all New York City rental units expected to become available in 2016 and 2017 will be along that stretch of Fort Greene. The amount of apartments is poised to depress prices — or at least put an end to the run-up in prices in recent years, some real estate players think.
“The market is saturated,” said Sofia Estevez, executive vice president at TF Cornerstone [TRDataCustom], which is developing a 714-unit rental at 33 Bond Street. “I think it’ll take a couple years to stabilize.”
According to Jonathan Miller, founder of real estate appraisal group Miller Samuel, the problem is that the mix is skewed heavily toward high-end apartments. “The top of the market is soft for both rentals and condos. That’s where the bulk of the new supply is coming.”
Rent growth among luxury pads is already showing signs of strain. According to Miller Samuel, the median rent for entry-level apartments grew 50 percent between 2009 and 2006 to $2,481. In the luxury segment, rent grew just 4 percent during that time to a median price of $4,783.
Amid the construction boom, David Schwartz, of Slate Property Group, which is developing a 160-unit rental at 1 Flatbush Avenue, predicted the run-up in rents in recent years will drop off. “I don’t think we’ll see any significant growth in the next couple of years,” he said.
Already, landlords are offering concessions to fill their buildings. At 7 DeKalb, tenants are being offered two months of free rent with a 14-month lease. The Gotham Organization’s 250 Ashland Place and Two Trees Management’s 300 Ashland Place have similar promotions in place.
Extell Development’s Gary Barnett, who is developing the third tower at City Point, is still unsure if the tower will be rentals or condos. It will not be “superluxury,” he said. [NYT] – E.B. Solomont