By Keith Loria
Ideal Properties Group is a Brooklyn-based real estate brokerage, which Aleksandra Scepanovic, co-founder and managing director of the firm, said was born in the populous—and by the measure of many—the most exciting New York City borough, right at the cusp of the market crash in 2008.
“As a company, we have thrived and grown our team and footprint alongside the reverberations of events that followed the Lehman Brother’s collapse,” she said. “Today, we are a 200-strong, and one of very few left, independent brokerage our size in Brooklyn. The borough has since been colonized by corporate competitors, and we proudly continue to carry the flag of a trusted boutique broker that cares about the client in a more meaningful and personal fashion.”
Scepanovic recently took time to talk to MHN about the state of affairs of multifamily in Brooklyn.
MHN: What have you seen so far in 2017 when it comes to multifamily investment opportunities in your area?
Scepanovic: A glut of new Class A supply is causing a weakening in the rental apartment absorption rate, coupled with a steady supply of concessions. And while units are sitting on the market longer, and landlords are seeing rents plateau or decelerate, experienced investors and owners are bypassing the rental season by offering lease renewals at the same, or slightly lower levels, than just a summer ago.
Still, the demand for quality apartments in prime Brooklyn areas, where monthly mortgage bills far exceed the rents, remains strong, albeit in a slightly lower price range. Tenants considering free market units are navigating the market by practicing negotiation skills and seeking to rent at reduced prices from those advertised, and at the same time saving for their move-in costs by opting more and more to entertain only “no fee” apartments.
MHN: What do you see as the trends in multifamily housing in your sector? What is on your radar?
Scepanovic: Enduring rent concessions are wide-spread as the existing assets try to compete with the influx of new developments. In established neighborhoods, proactive management practices for improved tenant retention are nearly as common as rent concessions. In under-established submarkets in Brooklyn, acutely aware of the potentially damaging effects of poor timing, investors are passing up assets that would require longer repositioning periods.
MHN: What do you feel is the most important thing that investors need to be aware of in today’s multifamily environment?
Scepanovic: In Brooklyn and New York City, keeping the finger on the pulse of the market is of crucial importance. A prudent Brooklyn investor will examine emerging opportunities while synchronizing their findings with the micro-local indicators. New York City in general is a geographically constricted market, its supply governed by the strong international, national and local demand. And yes, even though the Big Apple is continually on the radar of many investors, tenants, and buyers, a specific project must be examined independently and strategically, and for all of its potential pros and cons.
MHN: How would you characterize the need for more transit-oriented developments?
Scepanovic: Most Manhattan as well as prime neighborhoods in the boroughs are densely populated, walkable communities close to local amenities. Generally speaking, New Yorkers do not entirely depend on cars for mobility. The city’s train system innervates the metropolitan core fairly well, and despite significant, recent public scrutiny of the many issues plaguing the MTA, the MTA has seen its large projects and victories come to fruition in 2017. Second Avenue subway opened at the start of the year, readily impacting the area’s multifamily component and a newly invigorated blend of retail, commercial and residential life along the line.
MHN: How has a new president in the White House impacted multifamily so far?
Scepanovic: New York City marches to the beat of its own drum, and there has been little verifiable direct correlation between the new presidency and the city’s real estate market. The administration’s orientation toward economic growth, for example, is yet to gain traction meaningful enough to be reflected on the multifamily market.
MHN: What’s your biggest piece of advice with today’s current market?
Scepanovic: Analyze, analyze, analyze, and only then invest. If a project doesn’t pencil out, remember the old adage: “Some of the best deals are the ones you don’t make.”