New York and Brooklyn Multifamily Prices are Rising. Here’s Why.
- Jan 27, 2015
New York—Halstead Property Development Marketing has released the industry’s first-ever comprehensive report analyzing new development sales market data and sees continued robust pricing in the new development market for both Manhattan and Brooklyn in 2015.
“Over the course of six months, we followed all new development, whether it’s ground up or conversion, and we can up with six things that we thought were important information for developers; a little snapshot of everything we found,” Robin Schneiderman, Halstead Property Development Marketing’s senior vice president and managing director, told MHN. “This is solely on new development, nothing to do with the resale market. Additionally, it’s a year-end report and doesn’t take into account what’s in the pipe-line.”
The overall findings from the HPDM New Development Market Report, which includes current numbers and data from 2014, show that 52 percent of active new development listings in Manhattan are priced over $5 million with average active PPSF at $2,757, bolstered by Billionaire’s Row1 and an overall strong luxury market.
The median PPSF for active listings in Manhattan is 24.4 percent higher than contracts signed in 2014.
According to the report, the Brooklyn new development market is now approximately 10.5 percent as large as the Manhattan market by transaction volume. The report indicates that new development price points in Brooklyn are more approachable than Manhattan, with over 60 percent of active listings priced below $2 million. Additionally, active new development listings in Brooklyn remain very strong, averaging $1,326 PPSF heading into 2015.
“Brooklyn new development is emerging as a major market for new developments,” Schneiderman said. “I imagine that number will double in 2015. We expect to see average prices increase in Brooklyn with approximately 40 new development units coming to market this year priced above $2M in Dumbo alone.”
The report also looks at trends among specific neighborhoods, noting that outside of Billionaire’s Row, the neighborhood with the largest quarter-over-quarter average PPSF increase in Manhattan was Harlem, which had a 17.35 percent PPSF increase to $1,095 PSF in Q4 2014, Meanwhile, Downtown Manhattan saw the most new development activity in 2014, with over 1,150 units closed or contract signed.
“This is showing you the new development market in New York has significant pop,” Schneiderman said. “Once these closings trickle in, you’re going to see the average PPSF in New York City trend higher.”
Another interesting finding of the report concerns unit mix trends. In 2014, two bedrooms had the most signed and closed contracts of new development listings in Manhattan, representing over 740 new development units. In Brooklyn, one bedrooms were the most popular unit size with 90 new development units with signed or closed contracts.