Potential Williamsburg home buyers can choose from amenities such as fitness centers, pools, parking garages and rooftop decks with Manhattan views in buildings so luxurious that residents five years ago would have a hard time believing the neighborhood has become so high-priced.
Now comes the slowdown.
Like elsewhere around New York and the country, sales in Williamsburg are slowing, leaving some developers to wonder whether demand can meet the continuing supply of condos, a supply that is greater than any other Brooklyn neighborhood. Those monitoring the Williamsburg market started predicting a major downturn in sales about a year ago.
Concern may seem warranted when buildings like 55 Berry Street hold “One Time Sale” promotions advertised with the tagline, “The Madness Has Begun — This Sunday and Monday Only!,” as happened during two days this past month. On Nov. 12 and 13, the new condo building offered 20 percent markdowns on nearly half of its 42 units, with prices starting as low as $383 a square foot for large ground-floor duplexes. Prudential Douglas Elliman executive vice president Helene Luchnick, who is marketing the building, said 30 percent of the units sold during the two-day sale.
A study by The Real Deal last month showed developers submitting plans for 1,876 new condo units in Williamsburg to the state Attorney General’s office since the beginning of 2004 through this August, more than any other neighborhood in the borough.
More developments in the pipeline
Surprisingly, more than 40 percent of plans submitted for approval were done so in the first eight months of this year, after the market had already begun to cool. Those units won’t hit the market for another year or two, further adding to the condo supply unless the projects are abandoned.
But some agents working in Williams-burg say the situation isn’t as bleak as some have predicted and that as long as property owners are willing to be flexible on price and how they use their buildings — as well as understand who their customers are — the market should remain stable.
“The market in Williamsburg is similar to the rest of the city,” says David Maundrell, president of Brooklyn brokerage Aptsandlofts.com. “Slowing down compared to a year ago, but still not bad.”
Maundrell says the slowdown doesn’t have to be a disaster for developers as long as they’re willing to adapt. He uses The Point at 191 Woodpoint Road, a project he is marketing, as an example. When Maundrell first got involved with the project, developers intended to sell all the units, but when they saw a softening in the market, they decided to convert the building into Williamsburg’s first condo-rental hybrid.
That formula can work well for developers who are worried about selling all their condo units, but many others bought their properties two-and-a-half to three years ago at such high prices that they can’t afford to do a straight rental project, Maundrell says. Some developers, he adds, have their own contracting companies that can also help balance costs and flexibility in designing the buildings, important given the high cost of construction hitting developers everywhere.
Price is not right
While some developers are adapting, others are off-base in the prices they are trying to sell at, says Melissa Darling of Select Real Estate, a small firm with four agents.
“There’s always a market for people willing to pay a mortgage equal to their rent,” she says. “The problem is, owners are pricing condos based on the assumption that people are paying $3,000 for their monthly rent, but the majority aren’t paying that by themselves. They have roommates.”
Darling has seen a slight slowing in sales but adds that in mid-October she had sold two buildings that will be converted into condo projects, and she still sees plenty of interest in condo developers buying lots, even if prices have moderated.
“Selling a 2,500-square-foot lot for more than $1 million isn’t realistic in Williamsburg unless the land’s on the waterfront,” says Darling. “A more realistic price is around $750,000.”
And as far as buyers, she says, there’s no drop in interest. Owners just have to be realistic and not sell units for $500 to $600 per square foot. Around $400 is closer to what people will pay, Darling says.
Slowdown impacts big-tickets
Suzy Kline of Kline Realty says she started noticing the slowdown about nine months ago, the biggest change being fewer big-ticket apartment sales — meaning those over $800,000.
Kline also says clients have become pickier, and she doesn’t have the bidding wars or quick sales she had a year ago.
“It used to take two to three days to make a sale,” she says. “Now, it can take more like two to three months.”
Lower prices might not be the only way for developers to continue to sell out their projects, says Maundrell of Aptsandlofts.com.
He says luxury amenities make the difference in attracting buyers. Despite his confidence in the Williamsburg market, Maundrell sees a weakness in smaller buildings, like eight-to-10 family properties with no space to add amenities.
He says luxury buildings will continue to sell and points to Aqua, a 55-unit building on Leonard Street overlooking the pool at McCarren Park. Maundrell’s firm is marketing the project, advertised as “Brooklyn’s first uber-luxurious condominium.”
At the first open house last month, Maundrell said there were 16 offers all ranging between $725 to $900 per square foot. “In fact, I just sold an apartment today for $864 per square foot,” he said early last month.
But amenities might not be a draw for the typical Williamsburg resident, say other agents.
Luxury buildings won’t draw longtime Williamsburg renters who are now ready to buy, says Select Real Estate’s Darling, explaining that her clients have simpler expectations.
“People want to buy their apartments and don’t care as much about amenities and luxury,” she argues. “They want homes with character, a pre-war feeling.”
Shana Altstaetter, director of operations at HH Realty Group, says some developers can’t seem to figure out who they’re advertising to in the neighborhood.
She pointed to advertisements that plug all the luxury amenities that appeal to the kind of clientele that would just as soon stay in Manhattan and, on the other hand, a “Home-buying for Hipsters” seminar held by brokers in late October at Williamsburg’s Black Betty bar.
Altstaetter, who is based in Manhattan, remembers her firm receiving a lot of inquiries about Williamsburg after the major waterfront rezoning in the area in May 2005, but she says that interest has tapered off in the last year.
“Lately, in our experience, not many people have been interested in Williamsburg,” says Altstaetter. “They’re more interested in areas farther out — Clinton Hill and Fort Greene.”