What Brooklyn’s record $25.5M sale means for borough’s resi market
Strong demand, higher prices are becoming the norm in Brooklyn
Last week, Brooklyn notched its most expensive home sale ever when billionaire Vincent Viola’s Brooklyn Heights mansion sold for $25.5 million — and brokers in the borough are heralding the news as a harbinger of deals to come.
“Santa Claus came down a chimney,” said Warburg Realty’s Gerard Splendore about the deal’s quiet Christmas Eve closing. “Anything that sets a record always brings in good news.”
Monica Breese, a Douglas Elliman agent, said the sale of 8 Montague Terrace affirms her team’s philosophy that Brooklyn is “a choice,” not just a value play.
“This sale and price point demonstrates that people choose to live here,” said Breese, who works alongside Elliman agent Jessica Peters. “It’s almost refreshing to see that the influx of buyers due to the pandemic, especially in the townhouse market, has solidified what [Peters] and I have always known Brooklyn to be.”
John Walkup, the cofounder of data analytics firm UrbanDigs, said the transaction is “emblematic” of current trends in the Brooklyn market, such as the desire for more space and private outdoor areas.
But he also views the deal as the byproduct of a strong market for smaller studio to three-bedroom units. The volume of transactions among those smaller homes was up 25 percent in the fourth quarter compared to the year prior, according to UrbanDigs.
“That’s that rising-tide-lifts-all-boats kind of thing,” said Walkup. “You’ve got a townhouse, you’ve got a blue-chip Brooklyn area, and you’ve just got a mix of everything congealing at the same time — and you get these record prices.”
For Ravi Kantha, a broker at Leslie J. Garfield who specializes in townhouses, the sale tracks with the activity he’s seen among high-end buyers in Brooklyn Heights throughout 2020.
He pointed to the $10.55 million sale of 52 Remsen Street in November, which he and his team handled. The 8,300-square-foot home is 25 feet wide and 90 feet deep on a 180-foot lot, although it will require an extensive renovation that puts its true price — once those costs are factored in — at closer to $15 or $16 million.
Then there was pharmaceutical mogul Behzad Aghazadeh’s $16 million purchase of a townhouse at 81 Pierrepont Street and an adjacent carriage house, which he plans to combine into a megamansion. That renovation could mean Aghazadeh’s total spend is at least $18 million, if not higher.
And last January, actress Michelle Williams and director Tommy Kail bought a townhouse on Willow Street for $10.8 million, which the couple is now renovating.
Add Viola’s $25.5 million sale to the mix, and “that’s a lot for Brooklyn in one neighborhood in a year,” Kantha said.
He’s been working in Brooklyn Heights for five years, and often deals with buyers who venture to Brooklyn Heights after looking in downtown Manhattan. Now, he’s seeing more buyers coming from the Upper West Side and Upper East Side, both of which have not historically sent buyers across the East River.
“There’s a lot of people spending a lot of money in Brooklyn, [and] while that was a long-term trend a long time in the making, it really feels like the pandemic has opened more eyes to what’s here,” said Kantha. “It doesn’t feel like a secret anymore … [the] cat’s out of the bag.”
But a red-hot Brooklyn market is unlikely to surpass Manhattan’s in terms of pricing, thanks to the larger supply of townhouses — albeit ones that aren’t always in pristine condition — in the borough of churches, according to Walkup.
“You have a larger supply of [townhouses] that are not typically renovated and ready for their highest and best use,” he explained. “The average price is going to be held down by that, but the price per square foot for the finished product is going to be accelerating.”
Kantha agreed, noting that renovated townhouses ready for buyers to move into are increasingly in low supply — but command a 15 to 20 percent premium over those that need some work. He recently worked with buyers who signed a contract at 47 Sidney Place in Brooklyn Heights at just under $11 million because they didn’t want to renovate.
“It’s kind of stressful to take on a renovation under normal circumstances, but with Covid and the world just kind of being a crazy place lately, people want to cut one thing off the major to-do list,” he said.
But even townhouses that require extensive work are seeing strong demand.
Sharon Burroughs-Clarke, a broker at the Corcoran Group who’s worked in the borough for nearly two decades, recently listed a townhouse in Bedford-Stuyvesant that the city deemed a teardown for $550,000, expecting the final sales price to land closer to $500,000. After two weeks on the market, the home is now in contract and she’s fielded multiple offers, several over $600,000.
Whether activity in other neighborhoods and submarkets throughout the borough can be attributed to the Violas’ record-breaking sale is hard to prove, but some agents have seen major deals spur activity in the past.
Warburg’s Splendore recalled a client he worked with after Matt Damon’s record-breaking condo deal at the Standish in Brooklyn Heights in 2018. He helped her find an apartment in the same neighborhood as the actor at her request.
“It was a lovely apartment; it was a good price; it’s a nice neighborhood,” he said. “Matt Damon? Yeah, that’s kinda like a bonus.”