Rental spike improves Brooklyn property market

Brooklyn's rental market improved in recent months.

Both developers and commercial property managers witnessed a recent boom in apartment developments due to a spike in rental prices, according to Bloomberg.

Residential construction permits jumped to the highest number seen in four years during the first eight and one-half months of this year. Rents rose significantly during that time, as Brooklyn's average rose to more than $3,000, the news source explained, citing a report from MNS. The previous year's figure was approximately $2,800. This figure was significantly higher than Manhattan properties without a doorman. That price was below $4,500 per month.

Douglas Steiner, a New York property developer, told the news source that he has purchased property in the area, and plans to develop an apartment building with more than 700 units due to the rent spike of nearly 10 percent over the past 12 months.

"Everybody said we were crazy to be developing in Brooklyn, that nobody would ever come," Steiner explained to the news source. "From a financial point of view, I probably would have been better off buying up all of Williamsburg instead of building the studios."

Borough experiences many changes
Brooklyn has gone through multiple alterations in recent years, with the city's waterfront receiving a rezoning in 2005, the news source noted. This freed up a significant portion of space to add to both Williamsburg and Greenpoint.

Additionally, due to the economic surge before the recession, close to 1,000 permits were given for these properties, Bloomberg said. However, this was cut down significantly when Lehman Brothers went bankrupt in 2009.

Despite the issues, sales ramped back up in the area before 2011, the news source said. Not only have many residential properties filled, but the borough's new arena – Barclays Center – will host the NBA's New Jersey Nets later in the fall. That project cost close to $5 billion and spans 22 acres. Additionally, the area will see new apartment developments begin by the end of this year.

The Brooklyn construction permit situation rose 10 percent compared to September 2011, with much of the properties focused around rentals, the news source added. Steiner added that he expected that much of the borough will have significant commercial real estate market improvements through the next several years.

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