The Crown Heights multifamily market matures
Contrary to speculation of a market peak in 2015, Crown Heights multifamily property prices continued to ascent in 2016. Such sales activity and pricing reflect the neighborhood’s recent establishment as a prime live/work destination in NYC.
The area saw volume for the 1H2016 at $242.9 million, worthy of multifamily sales across 35 transactions, consisting of 50 properties. Annualizing this figure, the area is poised to see more than $485 million in multifamily sales for 2016. While this reflects a modest decline in total sales from 2015—which experienced a record high—rising prices suggest a lack of multifamily supply versus demand.
First half figures show the average price per square foot rose to $353 in 2016, which is a 21% increase from 2015 levels. Likewise, the area’s 1H16 average price per unit jumped 20%, hitting $261,000. These figures reflect a premium compared to other up and coming areas of the borough like Bushwick, which saw an average price per square foot of $334 during the 1H16. Noteworthy transactions include the February 2016 sale of 15 Crown St, a 58-unit multifamily elevatored building that traded for $20,750,000, which translates to $406 per square foot. Another is 1378-1386 Bedford Ave, a 40-unit multifamily elevatored building selling for $25,150,000, which translates to $654 per square foot. In January 2016, 991-993 President Street, a multifamily 63-unit walk-up building sold for $17,000,000, which translates to $368 per square foot.
Driven by solid returns, long-term upside, efficient subway transportation to Downtown Brooklyn and Manhattan, these essentials all point to heightened economic activity in the Crown Heights, and Prospect – Lefferts Gardens. Additionally, architectural beauty and proximity to Brooklyn’s Botanic Gardens as well as Prospect Park factor into this trend. In fact, we are seeing that these central Brooklyn neighborhoods are emerging as a focal point of transaction volume for the area.
With $2.3 billion in sales accounting for roughly 57% of total dollar volume, Brooklyn’s multifamily segment had a particularly active first half of 2016, according to Ariel Property Advisors’ 1H2016 Mid-Year Brooklyn Sales Report. Multifamily sales specific to Crown Heights were $242,907,096, which is 10.4% of Brooklyn’s total multifamily investment in 1H2016.
Residents in the area welcome the developments and are more willing to place long term roots in the area due to their formation. This is seen by rising rents and condo prices which are in turn driving multifamily prices upward.
While the looming 18-month L-train could cause short-term pain for parts of the borough, it could be a boon for others like Crown Heights that will have many newly constructed units to fill in the coming years. In fact, a recent study by StreetEasy named Crown Heights as one of city’s most comparable alternatives to Williamsburg in terms of affordability and commute time.
Looking ahead low interest rates continue to be a positive factor in the multifamily sector. Prices will also continue to escalate in Crown Heights due to high demand and the L-Train concern, as well as significant local amenities. The central Brooklyn neighborhood, characterized by a mix of historic brownstones, aged structures, and new condos, is still affordable.
Vice President at Ariel Property Advisors
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