Due to insatiable demand and a number of other factors, condos are finally being built again after the long post-crash hiatus.
And it’s not a moment too soon, given the lack of sales inventory in Brooklyn.
David Maundrell, the founder and president of aptsandlofts.com, explained to us why this is happening.
During the last downturn, condo builders had to hold inventory forever, it seemed, souring them on such developments. Then the national boom in multifamily investing hit and buyers of Brooklyn multifamily properties were willing to pay a higher price per unit than the individual unit buyers were. Soaring rents, lower transaction costs and a more favorable tax structure for developers building a property, leasing it and then selling it whole (versus the long and highly taxed unit-by-unit sales process) fueled the rental development boom.
Over the past six to twelve months, homeowner financing has settled down. Consequently, individual buyers in this market, Brooklyn’s tightest ever, are driving pricing up to record levels. These record levels are reaching values higher than an investor would typically pay for the entire building. As a result, many of our clients are considering condo development when bidding on available land. They are less interested in developing rentals due to record-high prices, little competition and a very limited pipeline for the near future.