The rapid ascent of property values in Brooklyn may be enabling residents to cash out and use their profits for a place in one of Manhattan’s start-up neighborhoods.
Ted Karagannis, a broker with Bellmarc Realty, said he’s handled about eight clients in the past two months who have moved from Brooklyn to Manhattan, with many heading to the Lower East Side.
“Everyone wants to live downtown,” Karagannis said. “People are moving back from Brooklyn to live downtown, which is interesting.”
“A lot of them bought out there, maybe five years ago, because they couldn’t afford the city. And because Brooklyn’s so strong now, they’re selling to buy something in the city, which they can now afford.”
Because a few Brooklyn neighborhoods such as Park Slope, Dumbo and Brooklyn Heights are now more expensive than some areas of Manhattan, including the far Lower East Side, Murray Hill, parts of the Financial District and Midtown West, the equation makes sense for folks who seek a Manhattan home.
Karagannis said the Brooklynites he sees moving back to Manhattan are focusing on the Lower East Side, specifically, around Grand Street and Alphabet City. “And the Village is the Village — it’s always in demand,” he said. The clients are in their late 20s and early 30s, he said.
“Six years ago, they were buying spaces in Brooklyn for $75,000 or $150,000, and now they’re able to turn those things for $300,000 to $400,000,” he said. “So that’s really allowing them an entry-level apartment in the city.”
That has worked out well for Karagannis. But other brokers, while intrigued and acknowledging that the trend seems logical, said they haven’t seen it yet.
“I can believe that, but it’s not that they’re spending less money in Tribeca– or wherever — than Brooklyn,” said Ingrid Johnson, a Manhattan-based broker with Brown Harris Stevens who lives and does business in Brooklyn.
“They’ve also gotten to a different spot in their own career — their incomes have gone up to where they can put more money into their purchase.”
That means property appreciation isn’t the sole reason that would account for a client’s leap back to Manhattan. Johnson said she worked with clients more than a year ago who had a dream of living on the Upper West Side and were able to do so through wise investment and renovation of Brooklyn Heights apartments.
“They purchased, fixed up, sold; purchased, fixed up, sold; purchased, fixed up, sold,” she said. “Now, they can afford the Upper West Side.”
Johnson said she had other Brooklyn clients who wanted to purchase in Tribeca, but never did. They ended up renting. And another Brooklyn client got divorced and chose to move back to a Manhattan neighborhood she believed was likely to appreciate in value. Marilyn Donahue, a Brooklyn specialist with Prudential Douglas Elliman, said the only Brooklyn clients she’s seen move back to Manhattan have been downsizing their families.
“In fact, what they are buying are $3 million to $4 million lofts or apartments,” she said.
However, most Brooklynites, when choosing to upgrade their real estate, stay within their own neighborhoods instead of leaping to another borough, she said.
Robert Krieger, a broker with The Corcoran Group, said he’s had only one client sell in Brooklyn to move back to Manhattan and, in that case, rent. The lack of inventory in Manhattan would seem to drive buyers in the opposite direction.
“There’s still a supply-demand problem,” Krieger said. “There’s still not enough supply for all the people who need apartments. So there’s still an exodus going on from Manhattan.”
If Brooklynites returning to Manhattan to buy in start-up neighborhoods isn’t a bona fide trend today, it’s in the offing. “It is logical,” said Jonathan Miller, president and chief executive officer of real estate appraisal firm Miller Samuel. “If you bought in Brooklyn seven years ago, and you sold today, those people would realize significant profits.”
And, in fact, there is anecdotal evidence, though no hard statistics to suggest that some buyers are returning to Manhattan, Miller said, but the cases typically involve Brooklynites who have seen income gains.
“People are leveraging the profits they’ve made in Brooklyn, and they’ve moved further along in their careers and have more income,” he said. “And then they’ve moved back to Manhattan.”