Despite month after month of record-high concessions in Brooklyn, Sugar Hill Capital Partners co-founder David Schwartz said at a panel on Wednesday that his company was actually starting to see them go down.
“Recently, we started to see rents stabilize,” Schwartz said. “It doesn’t mean we’re not having to give concessions, but even the amount of concessions that we have to give is starting to decline.”
Schwartz sat on a panel with Duke Properties CEO Albert Dweck, Benchmark Real Estate Group co-founder Jordan Vogel and TerraCRG broker Adam Hess at TerraCRG’s Only Brooklyn event on Wednesday, where they discussed the borough’s multifamily market. The conversation touched on issues ranging from concessions to co-living to the perennial question of the borough’s next hot neighborhood.
Despite concessions becoming a seemingly permanent fact of life in the borough, Vogel maintained that there was an undersupply of apartments in Brooklyn, particularly when it came to renovated units. He also said that landlords could still do well financially despite giving tenants a month or two of free rent, noting that they can walk away from the deal getting $90 per square foot.
“We all like to complain because we’re in New York City that I have to give a month free to get an apartment rented,” Vogel said, “but every apartment that we are asking the proper rent, we’ll rent this weekend. Unfortunately for the renters out there, we generally don’t like to ask the proper rent because we’re greedy.”
The panel also dove into the borough’s co-living trend, popularized by companies like Common. Schwartz said his company uses the concept at one of its properties but was unsure about its long-term potential, but Dweck was more confident in the concept’s importance. He noted that there is always some uncertainty when a new idea first comes along.
“That’s what an emerging market or an emerging trend looks like in the beginning,” he said. “No one knew what an iPod was when they had a CD sitting next to it. This is the same kind of thing.”
The panelists remained largely optimistic about Brooklyn’s rental market overall despite absorption concerns and transaction volume dropping, saying they were still encouraged by the borough’s continued population growth. Neighborhood candidates for the next big thing included Clinton Hill and Fort Greene.
“You’re not going to see this flow of people to Brooklyn change anytime soon,” Hess said. “I mean, people want to be here.”