The investment sales market in Brooklyn was lively in the first half of the year, mimicking the robust environment in Manhattan, according to the second quarter sales report for the borough from commercial brokerage TerraCRG, provided to The Real Deal today. Building sales in the borough totaled $1.8 billion so far this year, up 46 percent from $1.2 billion in the first half of 2012.Development sites saw the largest jump in dollar volume of assets traded of any property type, with sales up 84 percent year-over-year to more than $344 million from $187 million, the report shows.
“Because of tight inventory, there is pricing pressure,” Ofer Cohen, founder and president of TerraCRG, told TRD.
He said he believes the price per square foot for development sites in Brooklyn has doubled in the last year, but exact figures on that metric were not available. The borough of Kings currently has historically low housing inventory, as TRD has reported.
The most active area tracked by TerraCRG’s report was the Downtown Brooklyn/Park Slope region, where sales of development sites totaled $212 million in the first half of the year, up more than 600 percent year-over-year from about $27 million in the first half of 2012.
While many of the development sites have traded between smaller, local players, the largest sale so far in 2013 – Manhattan-based developer TF Cornerstone’s first Brooklyn acquisition – indicates a trend for Manhattan-based, and even national, institutional players, such as real estate investment trusts, to get in on the game, Cohen said.
In April, TF Cornerstone purchased 300 Livingston Street in Downtown Brooklyn, which offers 500,000 buildable square feet, for $70 million from Thor Equities. The site is currently a parking garage, but will reportedly become apartments, though the developer has not said publicly if they will be rentals or condominiums.
An estimated 12,000 residential units are under construction in Brooklyn at the moment, Cohen said.
The other property type that saw a jump in demand in the first half of the year was perhaps more surprising: industrial sites. Sales of industrially-zoned properties shot up 61 percent, from 36 to 58 sales, with the dollar volume of such trades up 22 percent, from $88 million to $108 million year-over-year.
Some 30 percent of industrial sales was in the Greenpoint area, where Cohen said demand for creative office spaces for technology and advertising companies had bolstered prices and deal volume.
“A lot of this commercially-zoned stuff will be converted into offices, similar to what happened in Dumbo,” Cohen said. “When markets are good, people look for the next frontier.”