The Real Deal New York

From Tribeca’s tepid triumph to the latest L train rent declines, a look at the biggest trends

Residential market report
By Chava Gourarie and Eddie Small | May 01, 2018 11:00AM

56 Leonard

City’s priciest neighborhoods see old and new 

Tribeca held as the city’s priciest neighborhood in 2018’s first quarter, despite a 30 percent year-over-year drop in its median sales price to $3.6 million, according to PropertyShark. The decline was mostly due to inflated sales last year, boosted by new development condo closings at 56 Leonard and 30 Park Place, where units sold for a median $7.2 million and $5.6 million, respectively. The West Village jumped to third place with a median sales price of $2.3 million in the first quarter, up 88 percent from the year before, largely driven by 10 transactions at 643 Greenwich Street. The biggest change was in Fort Greene, Brooklyn, which rose 131 percent, to a median $1.3 million. The priciest of 19 closed deals in the neighborhood was the $3.2 million sale of a townhouse at 59 South Elliott Place. Greenpoint was right behind, jumping 88 percent and tying with Fort Greene. That made them the second and third most expensive neighborhoods in Brooklyn after Dumbo, surpassing Brooklyn Heights and Boerum Hill, which saw some of the steepest declines. Both fell out of the top 10, and median sales prices declined 35 and 28 percent, respectively.

Brooklyn condo sellouts hit 10-year high

Brooklyn condo sellouts have hit their highest value in more than a decade. Developers filed plans for 62 projects with 1,089 units worth a total of about $1.18 billion during the first quarter of the year, according to a data analysis by The Real Deal. The combined sellout value was the highest since the second quarter of 2007, when developers filed plans for 95 projects with 1,274 units worth a total of about $1.22 billion. It was also the fifth highest combined sellout for the Brooklyn condo market dating back to 2000, the 11th highest number of residential units and the 17th highest number of projects. The leading project is Hudson Companies’ One Clinton at 280 Cadman Plaza West, the former site of the Brooklyn Heights Library. The 134-unit condo has a targeted sellout of about $478 million. That’s followed by Fortis Property Group’s 103-unit condo 2 River Park in Cobble Hill with a targeted sellout of about $221 million. The tower will rise 440 feet, making it the tallest new building in the company’s redevelopment of Long Island College Hospital.

Concessions fail to boost outer-borough rents

Even with the flood of concessions in Brooklyn and Northwest Queens, rents there are sliding. Both boroughs saw new records for the amount of rental transactions with concessions in March — nearly 48 percent in Brooklyn and 63 percent in Queens — per a recent Douglas Elliman report. In Brooklyn, the size of the concession year-over-year remained stable at 1.5 months, while in Queens, it rose from 0.9 months to 1.8 months. At the same time, the median net effective rent in Queens dropped to $2,559 in March, a 6.4 percent decrease and the fourth consecutive month that it went down. Brooklyn also saw the fourth consecutive decline in net effective median rent, which dropped by 6.3 percent, to $2,629. Without factoring in concessions, median rent in Brooklyn dropped 3.4 percent, to $2,750, and median rent in Queens dropped 1.8 percent, to $2,750. Real estate appraiser Jonathan Miller, who authored the report, said concessions were unlikely to keep hitting new records, although they won’t leave the marketplace anytime soon. Landlords and developers are “not keeping up with softening conditions as it is, and we have more product coming in,” he said, “so I think concessions are going to be embedded in the market.”

Rents fall further as L train shutdown looms

Rents along the L train fell for the seventh consecutive month, according to data from StreetEasy. Median rent in North Brooklyn, which includes Williamsburg and Greenpoint, came in at $3,027 in February, continuing a downward trend. The declines have been slight but consistent — less than 1 percent every month (both on a month-over-month and year-over-year basis) and down 3 percent from a peak of $3,118 in August 2015. The rent prices are being propped up somewhat by concessions, said Jacob Henderson, a broker with Citi Habitats, but he noted that vacancy rates are on the rise and tenants are hesitant to sign on in affected neighborhoods. “We’re at a tipping point right now” with the L train shutdown less than 12 months away, he said. Henderson added that he expects to see the full effects over the spring and summer leasing seasons. But looking ahead on a more positive note, renters in those parts of Brooklyn “may not need to go to the city, and they may be happy to stay in the neighborhood if it comes with a discount,” he said.