Research Paper: Downtown Brooklyn Residential Project

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[. . .] A projected rise in population, and a median income above the national average make the housing markets at Downtown Brooklyn to be a profitable business.

Housing Market Analysis

Corcoran, (2016) analyzes the housing markets in Downtown Brooklyn, and the author affirms that the housing prices in the area are more than double since 2006. Although, the housing prices slumped down in 2008 after the collapse of Lehman Brothers, however, the market came back to normal in 2012. In 2006, the median per square for residential houses was $320, and increased to $908 towards October 2016. Downtown Brooklyn Partnership (2015) argues that Downtown Brooklyn has recorded a significant increase in the real estate development since 2004 based on high demand for the residential units in the area. Typically, developers have completed a total of 6,758 apartment in the residential sector at Downtown Brooklyn in the past decade. Moreover, new residential projects totaled 2,000 are under constructions. A report by BRKLYN (2016) reveals that a construction project at Downtown Brooklyn continues to increase at an astonishing rate. Currently, 29 projects are under construction that will add to 7 million square feet new space. Out of these new construction projects, 19 residential projects will be 1,004 affordable units and 4,839 market rate units. Four of the new residential projects are Gotham's 250, the HUB, Pacific Park B2, and Ashland Place. Moreover, the rental prices for the residential building continue to increase at Downtown Brooklyn with the average rental price for one bedroom is $3,197 per month as being revealed in the fig 3 below:

Fig 3: Median Rental Price for Downtown Brooklyn Residential Housing

Source: Corcoran (2015)

A market report carried by Corcoran (2015) reveals the median rental prices for the residential building increase year after year. As being revealed in Fig 4 median rental price for the residential building was below $3,123 per month in the December 2014, however, the median rental price increased for one bedroom increased to $3,197 per month towards the end of 2015. Moreover, the three bedroom studios records11% increase in sales in 2014 with the median price of $545,000. Towards the end of 2015, the median price of 3-bedroom studios increased to $672,000. At Downtown Brooklyn the average price per square foot is ranked the second highest in the borough (Corcoran, 2015).

Fig 4: Downtown Average Rental Price

The data in Table 3 reveals the residential housing business is one of most profitable business in Downtown Brooklyn. Typically, sales of residential housing units increase by 50% from 2015 and 2016. Based on the data in table 3, the median price of studio increases by 15% between 2015 and 2016, and the price of three bedroom apartment increases by 52%. The sale price of multi-family also increase by 49% within one year.

Table 3:

3Q16

3Q15

% Chg (yr)

2Q16

% Chg (qtr)

Sales

17%

50%

Average Days on Market

66

61

8%

68

-3%

Inventory

-19%

-15%

Co-op Prices

Median Price

$685K

$719K

-5%

$615K

11%

Average Price

$1.055M

$959K

10%

$900K

17%

Median PPSF

$964

$946

2%

$946

2%

Average PPSF

$1,066

$1,009

6%

$1,097

-3%

Median Price by Bedroom

Studio

$415K

$360K

15%

$360K

15%

1 Bedroom

$550K

$599K

-8%

$585K

-6%

2 Bedroom

$1.113M

$1.243M

-10%

$1.200M

-7%

3+ Bedroom

$2.591M

$1.863M

39%

$1.700M

52%

Condo Prices

Median Price

$1.550M

$1.228M

26%

$1.307M

19%

Average Price

$1.985M

$1.331M

49%

$1.443M

38%

Median PPSF

$1,292

$1,200

8%

$1,198

8%

Average PPSF

$1,387

$1,230

13%

$1,270

9%

Median Price by Bedroom

Studio

$587K

$532K

10%

$695K

-16%

1 Bedroom

$775K

$908K

-15%

$973K

-20%

2 Bedroom

2 Bedroom

$1.432M

8%

$1.360M

14%

3+ Bedroom

$3.599M

$2.560M

41%

$2.422M

49%

Townhouse

Single-Family

Median Price

$6.500M

$5.450M

19%

NA

NA

Average Price

$6.220M

$4.399M

41%

NA

NA

Multi-Family

Median Price

$3.800M

$4.250M

-11%

$2.550M

49%

Average Price

$3.800M

$4.250M

-11%

$2.550M

49%

Source: Corcoran, (2016).

Feeney, (2016) also argued Downtown Brooklyn residential apartment median price was $606,000 in the early year of 2015, which was 15% higher than the price offered in 2013. The major reason for the increase in the price of the residential apartment is that foreigners and investors and pouring money in the borough in order to purchase apartment in the locality. The author further reveals many buyers are ready to pay cash. Typically, an apartment sold for $390,000 in 2013 now cost $550,000 "without a bit of renovation on the building. Moreover, the bidding war for a residential apartment is now a common phenomenon at Downtown Brooklyn. The author concludes many residential apartment owners regularly receive high prices selling offer for their apartments.

Kim, (2016) supports the argument of the previous author by pointing out that buyers of residential apartment face an intense competition in securing the affordable housing. Typically, there is a current scarcity of residential houses in the Downtown Brooklyn, and the scarcity leads to increase in the housing prices. The author further reveals that Downtown Brooklyn is the most competitive market in Brooklyn. As being revealed in Fig 6, Kim, (2016) provides the historical prices of the residential apartment between 1995 and 2016, the data reveals that that the price of a residential apartment was $200,000 in 1995, however, the price was more than $1.2 Million by September 2016. The appendix 4 provides the detail historical residential housing price in Downtown Brooklyn between 1995 and 2016

Fig 5:Residential Housing Price at Brooklyn Between 1995 and 2016

Source: Kim, (2016)

Similarly, the residential average rental prices increases between 2009 and 2016. In 2009, the residential rental prices at Downtown was $1,500 per month, however, the average rental price increased to more than $3,500 by September 2016 reaching $3,703 by the end of October, 2016.

Fig 6: Residential Housing Rental Price at Brooklyn Between 2009 and 2016

Source: Kim, (2016)

Fig 7: Residential Housing Price at Downtown Brooklyn Between 1995 and 2016

Source: Kim, (2016)

Fig 8: Residential Housing Rental Price at Downtown Brooklyn Between 2009 and 2016

Source: Kim, (2016)

BRKLYN (2016) argue that the bulk of construction project at Downtown Brooklyn are residential units totaled 70% of the project under construction adding to 5,843 new units to 6,758 units already completed by the end of 2017. An increase in the residential construction project in Downtown Brooklyn has been attributed to the rise in the demand for the residential units. Typically, the average price of one bedroom apartment at Downtown Brooklyn is above $3,000 and currently at $3,197 per month representing a price of $60 - $65 PSF (per square feet). Moreover, the median sale price of a residential unit at Downtown Brooklyn is $1.04 million. Table 4 reveals the summary data of the construction projects in Downtown Brooklyn.

Table 4:SUMMARY DATA

Completed

Construction

Pipeline

Total

Total Cost (Millions)

$4,213

$2,108

$4,143

$10,464

Total Condo Units (Market Affordable)

2,112

1,594

4,393

Total Rental Units (Market Affordable)

4,646

5,156

5,607

15,409

Total Market Rate Units (Condo Rental)

6,224

4,839

5,18

16,243

Total Affordable Rate Units (Condo Rental)

1,004

2,021

3,559

Total Residential Units

6,758

5,843

7,201

19,802

PROJECTS BY TYPE

Residential

28

15

11

54

Office

10

2

3

15

Retail

5

0

0

5

Mixed Use

10

6

10

26

Culture and Tourism

4

0

1

5

Hotel

4

3

2

9

Education

0

3

0

3

Other

0

0

11

11

All Projects

61

29

38

Source: BRKLYN (2016)

BRKLYN, (2016) points… [END OF PREVIEW]

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Downtown Brooklyn Residential Project.  (2016, December 3).  Retrieved March 25, 2019, from https://www.essaytown.com/subjects/paper/downtown-brooklyn-residential-project/2161460

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"Downtown Brooklyn Residential Project."  Essaytown.com.  December 3, 2016.  Accessed March 25, 2019.
https://www.essaytown.com/subjects/paper/downtown-brooklyn-residential-project/2161460.