The Real Deal New York

Betting on the Bed-Stuy boom

Climbing prices and new developments are signs that record growth could continue
By Brendan O’Connor | December 01, 2014 07:00AM
From left: Raymond Ruiz, Alain da Sylveira, Ban Leow, Brooke Safford, Stephanie O’Brien

From left: Raymond Ruiz, Alain da Sylveira, Ban Leow, Brooke Safford, Stephanie O’Brien

The recent popularity of Bedford-Stuyvesant is in many ways a mirror of much of Brooklyn; record prices — in Bed-Stuy’s case, condos that top $1 million — and an increasing volume of deals, as renters, investors, and homeowners glom on to the neighborhood’s still-affordable charms.

However, Bed-Stuy is a special case, too, in that many of the newcomers are drawn in by the existing community and its sensibilities, and are not looking to raze the area’s historic architecture, which includes a wealth of highly detailed brownstone and limestone row houses. TRD spoke with residential brokers with expertise in Bed-Stuy to understand the area’s formerly edgy reputation, its recent price movements, and whether neighborhood real estate has more room to run.

In the condominium segment, certainly, our roundtable thought that the peak has not yet been reached. Douglas Elliman’s Stephanie O’Brien noted that Bed-Stuy’s million-dollar condos are large, so their prices are only running around $500 a square foot (she said that the average for condos of all sizes is now more than $700 per square foot.) “The condo market will flourish for years to come in Bed-Stuy,” added Ban Leow of Halstead Property, who pointed out that there are new developments priced at more than $1,000 a square foot. “The developers of today get it and are offering high-end luxury condos to match the asking price.”

What does that mean for renters? While prices have moved up to around $2,400 a month for two-bedrooms — a significant jump over just the past few years — inventory is healthy and new luxury product represents an additional choice for tenants. Raymond Ruiz, who opened a Rapid Realty franchise in the neighborhood four years ago, said that at the time, “people told me I was out of my mind.” But with the area’s recent flourishing, “I love that so many other people are learning to see Bed-Stuy for what it really is, and not what it once was.”

Raymond Ruiz
Owner/Broker Rapid Realty Bedford-Stuyvesant

How much is sales activity in Bedford-Stuyvesant up or down compared to a year or two ago?

Sales are on the rise in Bed-Stuy. The sales market is still slow compared to where we’d love for it to be, but it’s on its way up. Bed-Stuy is getting more attention from buyers with each passing year. But like buyers anywhere, buyers in Bed-Stuy are being limited by tight lending practices.

What price ranges are seeing the most activity today for residential sales, and how does that compare to the recent past?

The extreme ends of the price spectrum seem to be getting the most attention. Investors are excited to scoop up any available property that comes on the market at the low end, something in the $600,000-$700,000 range, because they know they can flip it for a major profit with very little turnaround time. And the condos that are going for $1 million or more may sound pricey, but they’re a steal for someone who was otherwise going to have to drop $3 million on an identical condo in Williamsburg.

There’s been a surge in multifamily building sales in Brooklyn in the past year, and Bed-Stuy in particular has reportedly seen some of the fastest growth. How is that influencing the residential market?

Multi-family buildings are playing a gigantic role in Bed-Stuy. These buildings may have been designed as condos, but investors are finding the fastest route to success are by converting them into rentals. That’s something we deal with on a daily basis at Rapid Realty. The rental demand is creating a huge market for these multifamily properties, which is really helping Bed-Stuy grow as an active participant in the Brooklyn boom.

There are a number of new residential projects underway throughout Bed-Stuy, including some unique conversions. Which upcoming projects are you most excited about and which projects, if any, do you expect to be market gamechangers?

I’m particularly interested by the work that Brookland Capital is doing right now. They’re based in the neighborhood; they’re not some investment firm coming in and throwing up a high-rise because they think it’s easy money. They have a real interest in the area, and they’ve got some very attractive projects in the works right now, including 691 Marcy Avenue.

What are the biggest challenges to marketing residential properties in Bed-Stuy right now and what concerns do you have about the market there?

Bed-Stuy has a reputation to overcome. … In 2010, when I opened my Rapid Realty franchise in Bed-Stuy, people told me I was out of my mind. They only knew the area by its reputation, and they thought I’d never be able to grow a business here. But when I explored the neighborhood, I could see that it was a market that was right on the cusp of flourishing. I wanted to be a part of making that happen, and I’m very proud that I’ve been able to do that. I love that so many other people are learning to see Bed-Stuy for what it really is, and not what it once was.

Alain da Sylveira
Salesperson, Fillmore Real Estate

What price ranges are seeing the most activity today for residential sales, and how does that compare to the recent past?

Our most immediate territory — Stuyvesant Heights — is showing some very strong numbers in the $1.7 million range. Compared to two years ago, we have reached a point where consumer confidence is back.

Are there certain parts of Bed-Stuy that are performing better than others? Which are the best- and worst-performing sections, and why?

Stuyvesant Heights is surpassing our expectations and the opening of our new office in the heart of the landmark district clearly indicates our commitment to Bedford-Stuyvesant in general. We can, however, identify areas with more mixed-use property, like Bedford Avenue, Tompkins Avenue and Lewis Avenue, as the areas with record growth.

What about the rental market? Bed-Stuy was listed among the neighborhoods with the steepest rent increases since 2010 in one recent report. Does that jibe with your experience?

Affordable units are in high demand, and we are clearly seeing a decrease in availability in that market segment. … The market has [also] welcomed the introduction of luxury rentals like 196 Macon Street, with almost full-service amenities. More demanding renters are ready to pay above the norm for a more upscale living experience.

What is residential inventory like on the sales side in Bed-Stuy? Has it gone up or down compared to a year or two years ago?

We are still under-stocked on the sales side, and the proximity to Manhattan is turning any listing properly priced coming onto the market into a bargain. A few more rental properties have come at the same time. Some higher expectations from landlords keep these new rentals on the market longer, so we may see consensus building around better incentives.

There’s been a surge in multifamily building sales in Bed-Stuy; how is that influencing the residential market?

The most desirable products on the market are brownstones and limestone buildings with two to four units. There are very few available, and this lack of inventory tends to inflate the price in most of Bedford-Stuyvesant.

There are a number of new residential projects underway throughout Bed-Stuy, including some unique conversions. Which upcoming projects are you most excited about and which projects, if any, do you expect to be market gamechangers?

The recent sale of the Cascade Development site on Marcy Avenue, with over 400,000 square feet of residential space projected, is the gamechanger that will bring a new scale of project in Bedford-Stuyvesant. Some conversations about passive houses coming to Bedford-Stuyvesant will bring more buyers that are seeking innovation, design and sustainability.

What are the most surprising trends you see in the Bed-Stuy residential market today?

The high quality of renovation seen in recent months by short-term investors has reversed completely the idea that quality could not be part of a successful flip. Exceptional products and great design are being offered to buyers.

Ban Leow
Salesperson, Halstead Property

What price ranges are seeing the most activity today for residential sales and how does that compare to the recent past?

From $1 million and below $1.5 million. Three years ago, prices were in the $900,000 range.

Do you expect condo prices to continue rising in the neighborhood, or do you think there’s a limit on how high they can go?

The condo market will flourish in the years to come in Bed-Stuy. More and more are being built around the northwest side of Bed-Stuy. Bedford Avenue is already a commanding area for new condo conversions or developments, with price-per-square-foot going above the $1,000 mark. The developers of today get it and are offering high-end luxury condos to match the asking price.

Are there certain parts of Bed-Stuy that are performing better than others? Which are the best- and worst-performing sections, and why?

Stuyvesant Heights, Stuyvesant West and some parts of Stuyvesant East are performing very well. Anything that is close to the A express trains is desirable. The J trains are also getting very popular, with the influx of new property owners east of Stuyvesant Heights.

During the summer, TRD reported on a brownstone that was flipped for a 75 percent profit in just four months. Does that deal accurately reflect what’s going on with the brownstone market right now, or is it an outlier?

That was my listing, and it indeed created a market frenzy with such an aggressive flip. The deal accurately reflects what’s going on with brownstones in Bed-Stuy, if they are trophy properties in a great location.

What about the rental market? Bed-Stuy was listed among the neighborhoods with the steepest rent increases since 2010 in one recent report. Does that jibe with your experience, or are there still parts of the neighborhood where a renter can find a bargain?

The rental market is very active in Bed-Stuy. Bed-Stuy was never an expensive place to rent to begin with. For $1,900, one can rent an apartment offering almost 900 square feet of living space.

What is residential inventory like on the rental and sales side?

Healthy inventory on the rental side. Trophy properties in prime Bed-Stuy areas are low, but as prices inch up, more and more properties will come on the market. Property owners that have lived here for many, many years are cashing in.

What do you think the neighborhood still needs in terms drawing residents from other parts of the city?

Better grocery stores, more restaurants, bars, art galleries and clothing boutiques on the commercial strip of Bedford Avenue, Lewis Avenue and Malcolm X Boulevard.

What are the most surprising trends you see in the Bed-Stuy residential market today?

Bed-Stuy has always kept its cool and remained true to its close, community feel. The new wave of homeowners wants to be a part of this neighborhood. They understand the dynamics of the community, and contribute to the art, craft, fashion, food and fun of this very vibrant neighborhood.

Brooke Safford
Associate broker, Corcoran Group

How much is sales activity up or down?

With regards to the luxury market, the interest is excellent and people typically get their asking prices, even at the highest end of the market. I’m currently working on a deal that will break price records in the neighborhood, which speaks to the strength and power of the high-end market.

What price ranges are seeing the most activity today for residential sales and how does that compare to the recent past?

The high end of the market is really building — it seems like every week a new pristine, high-end property hits the market.

Are there certain parts of Bed-Stuy that are performing better than others?

Tompkins Avenue is turning out to be a hot spot for retail, with the recent opening of high-end boutique and coffee counter Sincerely Tommy, and soon-to-open Eugene & Co., a farm-to-table eatery. In turn, the homes in the area have stayed in high demand with a lot of buyers now requesting this location.

What about the rental market?

I’ve been seeing a lot of activity with rentals that are updated with modern appliances and finishes, but still maintain original details and a classic brownstone feel.

How long are residential condos staying on the market these days? 

I listed a two-bedroom condo priced at $499,000 and immediately got four offers, many over ask. It just goes to show that affordability is key in the market for those looking under $1 million.

What’s the retail situation like in Bed-Stuy?

My business doesn’t really involve retail, but it’s clearly following the residential activity. Every day there is a new café, restaurant or market — I especially love a new restaurant called Brunswick Café that just opened on the corner of Decatur Street and Marcus Garvey Boulevard.

What are the most surprising trends you see in the Bed-Stuy residential market today?

I’m seeing great interest in the opposite ends of the spectrum. On one hand, there is the strength of the high-end market and buyers seeking a luxury, finished product. On the other end, there are buyers seeking affordability under the $1 million mark. This is where the need for condos comes into play.

Stephanie O’Brien
Associate broker, Douglas Elliman

How much is sales activity in Bed-Stuy up or down compared to a year or two ago?

The number of sales of multi-family homes have increased nearly 30 percent compared to last year. The number of condos is about the same, because much of the multi-family properties and land that was purchased is still being renovated and converted into condos. I think the number of condo sales will increase dramatically by this time next year.

Do you expect condo prices to continue rising in the neighborhood, or do you think there’s a limit on how high they can go?

We are currently seeing a slightly more sluggish attendance at open houses, which could indicate an adjustment to the price increases; however, the average price for condos is reaching over $700 per square foot. In regards to the prices going over $1 million, these are on units that are closer to 2,000 square feet, which is $500 per square foot.

During the summer, TRD reported on a brownstone that was flipped for a 75 percent profit in just four months. Does that deal accurately reflect what’s going on with the brownstone market right now?

There are a few developers that have the ability to buy distressed and foreclosed properties very inexpensively, spend several hundred thousand renovating them and still achieve 75 percent profit. I wouldn’t say that this is the norm, but it is happening.

Bed-Stuy was listed among the neighborhoods with the steepest rent increases since 2010 in one recent report. Are there still parts of the neighborhood where a renter can find a bargain?

This is correct. It depends on what you consider inexpensive: two-bedroom units in an average building are closer to $2,400, whereas four years ago they were only around $1,700. Bed-Stuy rental prices are the same as East Williamsburg now. I think the bargains would have to be found further out in Crown Heights or Prospect Lefferts Gardens.

Is residential inventory up or down compared to a year or two ago?

More inventory. However, it stays on the market over a much shorter period, so ultimately it appears the same.

How long are residential condos staying on the market in Bed-Stuy these days and how does that compare to the last few years?

Around 30 days, compared to 60-90 a few years ago.

Which upcoming residential projects are you most excited about? Which projects, if any, do you expect to be market gamechangers?

178 Monroe, which are townhouse-style condo duplexes, and 620 Lafayette, which combines elements of the classic Bed-Stuy townhouses by giving outdoor space and exposed brick, with all the comforts of modern finishes.

What are the biggest challenges to marketing residential properties in Bed-Stuy right now and what concerns do you have about the market there?

Access to transportation is a bit of a challenge in some areas, and my only other real concern is that the prices went so high, so fast, that it will have to potentially level out a bit, or the quality of product will have to catch up to the level of the price per square foot.