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Increased inventory and luxury rentals lingering on the market have caused a handful of Brooklyn developers and others to warn of a possible coming housing glut in Brooklyn. “Scores” of glassy towers are “opening, topping out or breaking ground” in north Brooklyn, from Downtown to Williamsburg, The Wall Street Journal reported.

This year 2,655 units are expected to come to the market. By 2016, the peak of 3,282 in 2008 is expected to be exceeded, with 4,990 units projected to launch, according to the story.

In the next five years, 21,822 new units are expected to be delivered, more than double the 10,052 new units built in the five years prior, according to the story.

Dumbo, Downtown, Red Hook and Bed Stuy showed the most softening, with apartments for rent lingering the longest on the market. Red Hook units rented the most slowly, taking an average of 44 days. Apartments in Park Slope rented the quickest, in an average of 18 days.

Meanwhile, an entirely separate monthly market rental report out from real estate firm MNS shows average rental prices are stable, both month over month and when measured over a year’s time. Interestingly, average rents were up most dramatically in Boerum Hill and Crown Heights, while they fell in Bushwick.

In the luxury market — the top 10 percent by price — median rents dipped ever so slightly in July — down 3.4 percent to a median of $5,347, according to the Journal story.

Brownstoner’s take: If all the units on the dock get built, Brooklyn will see a dramatic surge in the number of apartments on the market. This may mean a softening of profits at the high end of the market, but the number of units will not be nearly enough to make units affordable for families earning average to below average incomes.

As analyst and appraiser Jonathan Miller told Brownstoner last month:

We have 5,800 new units coming on in 2017 — more than double the number this year — but the product being built is luxury. It’s skewed towards the higher end, and so it doesn’t solve the affordability problem for a large swath of the market — for studios and one-bedrooms. The new development doesn’t satiate the demand for typical rental apartments in Brooklyn.

The market for luxury rentals priced like their Manhattan counterparts may be reaching its limit, particularly in an area such as Downtown Brooklyn, which lacks the amenities such as schools, boutiques, and restaurants found in more popular areas such as Williamsburg.

The perception of a slowdown on the horizon could mean a pullback in financing and filings, so expect fewer luxury units planned past 2019.

Brooklyn’s Possible Housing Glut [WSJ]
Brooklyn Rental Market Report August 2015 [MNS]
Brooklyn May Get 22,000 New Apartments by 2019, But It Won’t Get More Affordable [Brownstoner]
Photo by Atomische * Tom Giebel


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