The dirtiest word in residential real estate is … luxury.
“Ninety-five percent of luxury is not luxury,” quipped Compass agent Christine Blackburn, who moderated a discussion Wednesday on what the term means in Brooklyn’s residential market. Panelists included Forest City Ratner’s Susi Yu, Alloy Development’s AJ Pires, Slate Property Group’s David Schwartz, Atelier New York Architecture’s Ken Hudes and Hamlin Ventures’ Abby Hamlin.
“It’s not [about] Gaggenau appliances; it’s not about brand and bling this, bling that,” said Yu, whose firm is partnering with Greenland Holdings to develop 550 Vanderbilt, a 278-unit condominium designed by COOKFOX Architects. “It’s about thoughtful design.”
Other attributes of luxury? Location, size and how unique a product is, panelists said during the discussion at TerraCRG’s “Only Brooklyn” summit.
In Dumbo, for example, Alloy Development built five townhouses at the corner of Pearl and Water streets that sold for north of $4 million each. “We delivered a product that wasn’t available,” Pires said.
Speaking about the townhouse market, Hamlin said “there’s never been a lot of product at any moment in time. You have one, you have two, you have five. But you don’t have 150 [townhomes] coming out.”
Hudes said that developers were being forced to think bigger.
“We thought in Brooklyn, people would be happy with a three- or three-and-a-half bedroom and they really want a four-bedroom,” he said. “Even my family.”
And there’s still a wide gulf between what buyers are willing to pay for luxury product in Brooklyn in comparison to Manhattan. In Brooklyn, Pires said, “there are lots of buyers up to $2.5 million. Once you get to $3 million, $4 million, $5 million, that’s a rare price point.”
According to Schwartz, however, though buyers in emerging neighborhoods such as Bushwick may be value-hunters, the “sky is the limit” in neighborhoods like Williamsburg, Dumbo and Park Slope.
At Alloy’s 1 John Street, where the average sale price topped $1,800 per foot, Pires said the site contained a “perfect storm” of attributes: A site in Dumbo that was within Brooklyn Bridge Park and boasted views of three bridges.
Half of the buyers at the project were Brooklynites, Pires said, while the rest came from Manhattan and Los Angeles.
“These were people coming to purchase $5 to $6 million homes who would only go to Brooklyn,” he said. “We thought we’d do a lot of ‘Oh, this is so much better than Tribeca or the West Village,’ but Brooklyn sold itself. It’s become Paris over the last several years [and] we can’t take credit for that.”
Schwartz said Slate saw a similar buyer pool at its condominium at 51 Jay Street in Dumbo. “People wanted to be in Dumbo; they wanted the authenticity that’s been lost in Tribeca,” he said.