“Prospect”-ing for sales: prices and activity on the rise in Prospect Heights

Jun.June 01, 2013 07:00 AM
From left:

From left: Brendan Aguayo, Judith Siegel Lief, Jonathan Miller and Barbara Brown Allen

Prospect Heights is known for its brownstones, growing crop of hip restaurants and bars and proximity to the controversial Barclays Center arena, which opened in September. While there have been some complaints about rowdy Brooklyn Nets and Justin Beiber fans, the doomsday scenarios predicted by opponents of the stadium have not come to pass, at least when it comes to real estate. In fact, Prospect Heights’ popularity (and rising prices) is spilling over into nearby Crown Heights, so much so that the once-stark borders between the neighborhoods have blurred. Brokers and others now refer to the northwest corner of Crown Heights, between Washington Avenue and Nostrand Avenue, as “ProCro,” despite angry remarks about the nickname from residents and politicians, such as Congressman Hakeem Jeffries.

In this month’s Q&A, The Real Deal talked to local brokers and industry experts to find out what’s happening in Prospect Heights, Crown Heights and ProCro. The area continues to see rapid change, as manufacturing, auto repair and storage facilities are replaced by hotspots such as Bar Corvo, an Italian bistro on Washington Avenue; the Mexican eatery Chavela’s on Franklin Avenue; and Lincoln Station, which opened in January in Crown Heights. And while construction slowed during the downturn, residential projects are finally returning to the area, including a 14-unit rental building at 818 Dean Street and a 65-unit building under construction at 341 Eastern Parkway in Crown Heights.

For more on the ProCro debate, the impact of the Barclays Center and the area’s retail hotspots, we turn to our panel of experts.

Hal Lehrman, principal broker, Brooklyn Properties

How is residential sales volume in the Prospect Heights area right now, and how does that compare to a year ago, two years ago and during the boom?

There is a shortage of listings everywhere. Right now, I am showing stuff in Prospect Heights that a year ago couldn’t be sold, and it’s going very fast in bidding wars, at asking [price] or even above. This is across the board; Crown Heights, Prospect Heights, no difference. New developments that weren’t selling before are selling now. So this is a really unusual phenomenon right now, and it’s been a long time since we’ve seen it: All the companies are running out of listings, and we are not running out of buyers. The pressure is on for expansion again, big time, into areas that were sleepy before.

How is overall residential sales volume in ProCro specifically?

It’s very, very strong, the pressure from the border. The feeling that you are leaving Park Slope has diminished enormously.

What are some other new trends?

The higher end of the market is even stronger than the middle and lower end. In the more expensive neighborhoods, prices are soaring at the upper level. For brownstones everywhere — Park Slope, Prospect Heights, Clinton Hill, Brooklyn Heights, Carroll Gardens, Fort Greene — the prices are dramatically higher than they have ever been. A brownstone at over $3 million in Park Slope is now normal.

The Richard Meier–designed new condo 1 Grand Army Plaza finally sold out after several years. How did that project affect the market?

They set a standard, a new mark at the time, for the price of things being sold. A lot of very wealthy people bought in that building. That had a very positive impact on the whole area.

How has the Barclays Center affected residential prices and sales in Prospect Heights and ProCro?

It’s starting to have a very positive impact. We sold a house on Washington just south of Atlantic Avenue. It was a difficult sale a year and a half ago, but they [the new owners] fixed it up entirely and they are feeling very happy with their purchase. They could resell for a big profit, although that’s not what they intend to do. Where investors were feeling skittish about making a move, they are now feeling confident, and the restaurants all up and down near the Barclays Center are doing incredibly well. The traffic proved not to be anywhere near as traumatic as people expected. So it’s really quite a change. The Barclays Center is very popular and is driving prices up.

How long are properties staying on the market in Prospect Heights and ProCro, and how does that compare to a year ago and during the boom?

One or two weeks, maybe a month. There are bidding wars on most properties. There’s a property in Prospect Heights, 870 Pacific Street. We put it on the market three weeks ago and we had around 150 people show up. And there is a bidding war.

When did bidding wars start happening again?

I’d say maybe two months ago it started and has been crescendoing up. In each bidding war there is one winner and many losers, so they start to accumulate, and when they come back they are ready to win, so it gets more intense.

Jonathan Miller, CEO, Miller Samuel Real Estate Appraisers

How is overall residential sales volume in Prospect Heights and Crown Heights right now, and how does that compare to a year ago and during the boom?

So far this year (through mid-April), there have been 53 sales in Prospect Heights. That’s up 23.3 percent from 43 in the same period of last year, up 12.8 percent from 47 two years ago, and down 19.7 percent from 66 in 2007, at the height of the boom. In Crown Heights, there have been 95 sales so far this year, up 51 percent from 63 in the same period of last year, but down slightly from 99 in 2007.

How has the controversy over the ProCro name and the disputed neighborhood boundaries affected the market?

The acronym naming convention seems to have accelerated over the past several decades. The topic has brought additional awareness to the area, probably for a net benefit to the market. I think what’s happening is with the market tightening and a natural expansion from Prospect Heights, that is creating a new submarket. Brooklyn is seeing this across many neighborhoods, as people are searching for affordability. I expect many more acronyms to be created over the next several years.

What’s going on with residential sales prices in Prospect Heights and Crown Heights?

Over the past year, prices and sales have seen larger gains in Crown Heights than in Prospect Heights, but the average prices in Prospect Heights are still nearly double. Crown Heights has benefited from the spillover from Prospect Heights. In Prospect Heights, the average sales price this year to date is $719,031, up 1.6 percent from $707,647 a year ago. It’s 16 percent higher than $619,914 in 2007. In Crown Heights, the average price for sales so far this year is $453,798, up 18.4 percent from $383,388 last year, but down 15.7 percent from $538,130 in 2007.

How has the Barclays Center affected residential prices and sales in Prospect Heights and ProCro?

I think we are already seeing an uptick in activity. I don’t know if the price trends are directly related, but I think it is a pattern we are going to see over the next decade. One of the reasons why the city encourages this kind of development is to revive growth in the surrounding area. I think once they put that trend in motion, we would expect more activity and therefore upward pressure on prices.

Judith Siegel Lief, senior vice president, Warren Lewis Realty

How are overall residential sales prices in the Prospect Heights area right now, and how does that compare to a year ago and during the boom?

Prospect Heights has gotten steadily pricier; in some cases, competitive with Park Slope. As the quality of schools improves, the distinction will become even less. Crown Heights is starting to improve as sales [in other areas] become saturated.

Which price ranges and housing types in the area are struggling the most now?

Like any other neighborhood: small apartments and those over train lines.

How long are properties staying on the market in Prospect Heights and ProCro, and how does that compare to a year ago and during the boom?

They go fast — in a couple of weeks — if they are well priced.

Wendy Stephenson, vice president, Brown Harris Stevens

How is inventory in Prospect Heights right now, and how does that compare to a year ago and during the boom?

I wish there was more inventory in Prospect Heights, because the demand outweighs supply, and that is one of the biggest differences between 2013 and prior years. In 2011 and 2012, there was a burst of inventory in buildings like 580 Crown, 1509 Bergen and 1311 Pacific, for example; and I haven’t seen that in 2013.

What do you consider to be the borders of Prospect Heights vs. Crown Heights, and how has that changed in recent years?

I’ve usually considered the borders of Prospect Heights to be Plaza Street, Flatbush Avenue, Atlantic Avenue and Washington Avenue, and Crown Heights to be Washington Avenue, Atlantic Avenue, Utica Avenue and Rutland Road, but I know that boundaries are blurred.

What is the impact of new stores and restaurants in Prospect Heights and Crown Heights? Which new stores and restaurants are the most popular and have caused the most change in the neighborhood?

From what I’ve seen, the march of great restaurants and shops started on Vanderbilt Avenue and has been rapidly moving east over the past year or two. The list is so long. I personally love Ample Hills, 606 R&D, Chuko, Bar Corvo, Kimchi Taco, Mayfield, Chavela’s, Blue Marble, Joyce and the Vanderbilt.

The Richard Meier–designed new condo 1 Grand Army Plaza finally sold out after several years. How did that project affect the market?

I think that it may have put Prospect Heights on the radar for some buyers who hadn’t considered that neighborhood before.

How long are properties staying on the market in Prospect Heights, and how does that compare to a year ago and during the boom?

In many cases, there are multiple offers after the first open house. In my experience, that is a change from past years.

Brendan Aguayo, senior vice president, Halstead Property

How has the controversy over the ProCro name and the disputed neighborhood boundaries affected the market and your business?

I, for one, will never use the moniker ProCro.

What’s going on with rentals in Prospect Heights and Crown Heights?

Much like the sales market, the rental market in the neighborhood is extremely strong. As people were priced out of places like Park Slope, Carroll Gardens and Cobble Hill, they started to pour into adjacent neighborhoods with a similar housing stock, aesthetic and access to public transportation. Additionally, Prospect Heights and Crown Heights have had a larger amount of new-development inventory that appeals to renters. We just started the lease-up of a new construction 14-unit building located at 818 Dean Street and have experienced an incredible amount of traffic. Within two weeks, we have seen applications or signed leases on 65 percent of the building and expect to be finished by the end of the month. At this point, the rental market is really able to quickly absorb any quality product that becomes available. The main difference that we’re seeing compared to a year or two ago is that development sites that were intended to go condo are indeed hitting the market as condos, whereas a couple of years ago, there were a number of developers that decided they would be better served switching to the rental option.

What’s going on with residential sales prices in Prospect Heights?

Over the past six months, we’ve seen both per-square-foot prices and price ceilings in the Prospect Heights area increase substantially — particularly with regards to new development product. At 96 St. Marks Avenue, we achieved an average of about $980 per square foot. At 268 St. Marks Avenue, we had accepted offers on every unit in the project within one week of the first open house.

What new trends are you seeing?

We’ve seen a bit of a demographic shift in the Prospect Heights market recently. Whereas a few years ago developers largely built for young singles, now there is an incredible demand for large apartments that can accommodate families. For example, at 268 St. Marks all of our units were targeted to families. At another project that we will launch in a few months, at 650 Bergen Street, we’re also only doing large units. For the most part, condo developers in the area are choosing not to even include any one-beds or studios in their unit mix. However, in many of the projects we are doing in the Crown Heights area, our unit mix consists mostly of one-bedrooms, tight two-bedrooms and some studios.

What is the impact of new stores and restaurants in Prospect Heights and ProCro on the residential market?

Vanderbilt was the first retail corridor in Prospect Heights that really helped attract attention from prospective renters and purchasers. Early additions like Soda Bar, Cornelius and Plan B helped establish it as a destination within Brooklyn. The same thing has happened on Franklin Avenue where places like Bar Corvo, Chavela’s, Franklin Park and Breukelen Coffee are attracting both families and the hipster set. I would say that Franklin Park really set the bar — no pun intended — for the area and was one of the early catalysts to jumpstart the retail value for the area.

How has the Barclays Center affected residential prices and sales in Prospect Heights and ProCro?

The Barclays Center has had less of an impact on the neighborhood than some feared. But that’s not to say that there haven’t been speed bumps, or that there aren’t those who have been permanently affected in a negative way. A lot of the mom-and-pop-type retail around the arena on Flatbush and Atlantic has already experienced intense upward pressure on rents, as national brands have gained interest in the foot traffic and visibility created by the crowds. Many of them won’t be able to hang on, and for those that have already left, they probably won’t be coming back to the area. With regards to residential real estate, the completion of the project helped to quell any fears of potential purchasers that previously expressed concerns over the unknown. For example, in 2011 and 2012 at a condo project we represented on Dean Street adjacent to the arena, we regularly fielded concerns from prospective buyers about construction noise and dust, future issues with crowds and noise on the street, and the eventual design of the arena. However, when we brought the last unit to market this year, there wasn’t the same concern because purchasers could get a feel for what the impact really was, and they were generally comfortable with it.

Erik Serras, principal broker, Ideal Properties Group

How has the controversy over the ProCro name and the disputed neighborhood boundaries affected the market and your business?

As a true ProCro-er, I do welcome the re-invigorated businesses, and the pseudonyms that bring them.

What’s going on with rentals in the Prospect Heights area?

This season, units in Prospect Heights are renting for more than a year ago. Units in Prospect Heights are staying on the market for a half-day, one day, two days, three days, maximum. Units in Crown Heights linger on the market for an additional day or so, but the competition is stiff either way. The market is absorbing anything with utmost haste, even with prices being — on average — $200 to $350 per month higher than they were in 2012.

What’s going on with residential sales prices in Prospect Heights? Are prices up or down compared to a year ago and during the boom?

Ideal Properties has in contract a townhouse in Prospect Heights for $3.15 million. Only a year ago, [that] number would have been unimaginable.

Barbara Brown Allen, agent, Douglas Elliman

How is overall residential sales volume in the Prospect Heights/Crown Heights area right now, and how does that compare to a year ago, two years ago and during the boom?

I do a lot of work in Crown Heights, [where] prices are going right up because there is less inventory.

What do you consider to be the borders of Prospect Heights vs. Crown Heights, and how has that changed in recent years?

There is a debate about where the border is. Most people feel the border between Prospect Heights and Crown Heights is Washington Avenue. Crown Heights proper to me would be as far as Brooklyn Avenue. Kingston Avenue, which is a little farther east, is also becoming a nice commercial corridor.

How has the controversy over the ProCro name and the disputed neighborhood boundaries affected the market and your business?

I would like to clear this for the record: There is no ProCro. I have been a resident of Crown Heights for 12 years and the people of Crown Heights are proud of their community, and 95 percent of the people do not want the name to be changed. Whoever is making that name — it’s not going to fly. We hate ProCro; we are beautiful Crown Heights.


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