The Real Deal New York

The bar for Brooklyn resi sales just got higher

Deals like the $15M Dumbo Clock Tower sale could set a new precedent for big-ticket buys
By E.B. Solomont | May 01, 2017 11:00AM

The $15 million sale of the triplex penthouse at the Clock Tower set a new price record for condos in Brooklyn.

It can take years to shatter a New York City sales record, but in Brooklyn’s red-hot condo market, a trio of deals has raised the bar several times in the past six months.

Most recently, the triplex penthouse at the Clock Tower building in Dumbo traded hands in late March for $15 million. That came on the heels of the $10.67 million paid for a condo at Pierhouse just weeks earlier. Before that, the priciest condo deal was at the $8.1 million penthouse at 1 John Street in October 2016.

In the case of the Clock Tower, brokers said that while the 7,000-square-foot trophy pad’s sale price isn’t quite reflective of a new market realty, the deal is an endorsement of Brooklyn’s high-end market.

“If you had said 10 years ago that there’d be a $15 million sale — for a condo or any residential property — that would have been unheard of,” said Zach Ehrlich, founder of residential brokerage Mdrn.

He added that the Clock Tower sale is likely to trigger other deals, because buyers tend to move with a “herd mentality.”

To date, a Cobble Hill townhouse at 177 Pacific Street holds the distinction of being the borough’s priciest sale, after trading for $15.5 million in 2015. But there are pending deals nipping at its feet.

In January, Kushner Companies’ townhouse at 27 Monroe Street — last asking $16 million — went into contract after six months on the market.

Douglas Elliman’s Rita van Straten said the recent record-breakers could help buyers justify big-ticket purchases in Brooklyn. “What was once considered aspiration pricing is now the new normal,” she said.

As just one example, she pointed to 75 Henry Street, a co-op in Brooklyn Heights, where two-bedrooms were going for around $950,000 in 2010 and 2011. Today, the same apartments are trading for north of $1.5 million.

During the first quarter, sales volume in Brooklyn was off the charts: $2.8 billion worth of residential sales, up 83 percent from $1.5 billion a year earlier, according to appraisal firm Miller Samuel.

In addition to new inventory fueling the market, the average sale price was $993,955 during the first quarter, up 25 percent year over year.

According to Halstead Property Development Marketing, the number of sales above $3 million tripled between 2015 and 2016, when 101 properties closed for over $3 million, compared to just 34 in 2015. There are currently 40 active listings north of $3 million.

Stephen Kliegerman, president of Halstead Property, predicted that “the next round of projects will raise the bar again.”

Several brokers and new-development marketers said the office and residential markets in Brooklyn have a symbiotic relationship.

Architect Bjarke Ingels, for example, recently inked a deal to move his office from Lower Manhattan to Two Trees Management’s 45 Main Street, where Bjarke Ingels Group is taking 50,000 square feet. Three-quarters of his 200 employees live in Brooklyn, according to Ingels, who paid $3.9 million for his own Dumbo apartment in 2015.

Other commercial developments with space geared toward technology, advertising, media and information tenants, including locations in the Brooklyn Navy Yard and Dumbo Heights, are also bringing renters and buyers to the borough. Developers are taking note, and new condos in Downtown Brooklyn and Williamsburg are geared toward a luxury buyer.

Nonetheless, some brokers are worried about a flood of high-priced inventory.

Halstead Property’s Shelley Wasserman said there’s already an oversupply of apartments north of $3 million. “You see price chops almost every day because somebody at that price point is in no hurry; they have what to choose from,” she said.

(To view a chart of accepted condo units in Brooklyn across the last 10 years, click here)