Zachary Kerr said he considers a bear market perfect timing to break ground on a luxury rental in a southern Brooklyn Orthodox Jewish enclave, the first new development for his family business, M&R Management, in three decades.
While high-end condos have sprung up across the borough, Kerr said little rental property of similar quality has been built, particularly in Orthodox neighborhoods. Now that banks often require 20 percent down, it’s become harder to buy, he said, so “you have somebody that’s earning a household income of $125,000 a year … they can’t afford to put $200,000 to $300,000 into a two-bedroom apartment.”
But perhaps they could afford rent at 3692 Bedford Avenue, in one of Brooklyn’s most exclusive Orthodox neighborhoods, which Kerr referred to as Madison-Bedford, bounded by Kings Highway, Nostrand Avenues and Avenue P. Architect Karl Fischer designed the eight-story, 51-unit building.
“This provides the average resident with a conservative and safe place to live as we ride out what’s happening in the economy,” he said.
Construction started last month, with occupancy anticipated spring 2010.
As The Real Deal reported in December, several of Brooklyn’s Top Sales Have Taken Place Near The Bedford Avenue development, including Midtown Equities founder Joseph Cayre’s 7,526-square-foot mansion at 3542 Bedford Avenue, sold in October for $10 million.
Kerr, according to city records, spent $5.58 million on 5,620 square feet of air rights and five adjoining properties ? each containing two- or three-story residences characteristic of the neighborhood ? to create the 66,000-square-foot building.
Orthodox features include double-drawer dishwashers to accommodate the separation of meat and dairy, dining areas large enough to comfortably seat six, and an elevator that automatically stops at every floor during Sabbath. Several synagogues are within walking distance.
“If you look at what’s been built over the last four or five years, it’s all condos,” Kerr said. “Rental housing is either non-existent in this particular neighborhood or it’s a two-family home where you don’t have the services of an apartment.”
M&R Management has built over 5,000 units of housing since the company was founded 70 years ago by Kerr’s great-grandfather, Meyer Berfond. The firm still manages over 1,000 units.
Kerr said the family’s three-decade gap in new construction happened because his great-grandfather eventually became too old to oversee construction, and his father, who took over the business next, was more interested in managing rentals than building them.
“He always thought construction was too burdensome,” said Kerr, who took over the company in 2000.
Kerr said rents would be at least $30 per square foot, but he hoped to get $40 per square foot. His company manages an 11-story 1960s renovated doorman building a few blocks away that charges $2,000 for a two-bedroom, but he said there’s nothing new in the area with full services, a fitness center and a playroom.
Kerr said a few of the $25 million project’s investors wanted to build condos when the Bedford Avenue properties were first purchased a year ago, back when the condo market was still strong. But even then, he said he wanted to build rentals.
“At the end of the day, [with condos] you end up with a lot of cash and, depending on what the market is like, it becomes difficult to reinvest … It doesn’t allow you to build real equity,” he said, adding that he can pass rental earnings down to his children. “We’re not building for now, we’re building for the future.”