Brooklyn’s multifamily-heavy investment sales market had a tough year in 2019, thanks to new rent laws and new development.
The total dollar volume of commercial property sales in the borough declined by more than 30 percent year over year to $5.1 billion, the Wall Street Journal reported, citing data from TerraCRG. This was the largest decline since the financial crisis, and was driven by a 56-percent drop in apartment-building sales.
“We are going to see a lot of distress in the rent-regulated multifamily market,” Slate Property Group’s David Schwartz told the Journal.
According to brokers, the value of rent-regulated apartment buildings has fallen by a quarter on average since Gov. Andrew Cuomo signed in the new rent law in June. Meanwhile, the volume of office and industrial property sales remained close to previous years.
Slower rent growth caused by a glut of new apartment construction has also played a role in reducing investor appetites. In the long term, the limited supply of market-rate units could boost rents at such properties.
The gentrification resulting from Brooklyn’s decade-long investment boom, driven by developers and investors the world over, has long been a hot topic in local politics. On Monday, Brooklyn Borough President Eric Adams attracted controversy by singling out Midwesterners for driving gentrification.
“Go back to Iowa, you go back to Ohio,” he said during a speech in Harlem on the occasion of the Martin Luther King Jr. national holiday, the New York Post reported. Adams is the leading fundraiser in the 2021 mayoral race and has received major campaign contributions from the real estate industry.
“The mayor doesn’t agree with how it was said, but the Borough President voiced a very real frustration,” a spokesperson for Mayor Bill de Blasio told the Post. [WSJ] — Kevin Sun