For decades, maybe even centuries, the high-profile land development projects in New York City traditionally took place in Manhattan. But as the 2000s got underway, Brooklyn construction started to pick up the pace and many real estate developers started to wonder if Brooklyn would ever catch up to Manhattan in future construction projects.
Fast forward to 2017 and it looks like Brooklyn may not just catch up to Manhattan in new projects, it could surpass Manhattan as the city’s most vibrant borough. Between large commercial projects and residential housing complexes, Brooklyn is becoming the trendy new place for developers to build. However, as more and more large-scale projects get approved in Brooklyn, it has become apparent that land development outside of Manhattan is more than just a temporary trend.
Brooklyn Attracting Million Dollar Commercial Projects
The land development project that was recently announced in Brooklyn is the kind of future construction deal that is typically reserved for Manhattan. The Brooklyn Navy Yard’s Dock 72 project is a $410 million dollar commercial development deal that will result in a 16-story office building to be completed by 2018. In January 2017, it was announced that $250 million of the necessary funding had been secured and that future funding was being lined up.
The significance of this deal is that it proves that investors of any kind (three major banks in this instance) are seeing the vast potential of land development in Brooklyn. Projects that used to be easily approved for Manhattan are not seeing the same priority in Brooklyn. Meanwhile, Manhattan is still waiting for its next big development project that will bring more money into an already wealthy area.
The Beginning Of The Land Development Boom
Brooklyn’s land development boom started when the state introduced a program to give tech start-ups incentives to come to New York City. Brooklyn seemed to benefit the most from the program, and it wasn’t long before Brooklyn was the trendy home to a growing number of Internet and technology start-ups.
During that same period, residential housing was being built in Brooklyn at a rapid pace to accommodate the growing number of people who work in Manhattan, but could not find or afford housing close to work. Over time, developers started to look towards existing neighborhoods for developing residential housing because those neighborhoods already had the features that would attract new tenants.
One of the issues facing Brooklyn is gentrification. The number of wealthy people who work in Manhattan but want to live in Brooklyn is constantly growing. New York City mayor Bill de Blasio has been fighting gentrification throughout the city by making affordable housing mandatory for any developer who wants to enjoy the benefits of tax abatements offered by the city.
When those tax abatements were discontinued in early 2016, the issue of gentrification slowly started to come back to the surface. But Brooklyn had so many projects in the works based on affordable housing standards, that Brooklyn soon became the place to live for people in all income brackets. That is how Brooklyn started to take over as the place to live in New York City. It is also part of the story of why Brooklyn is now getting so many large commercial future construction projects.
Living And Working In Brooklyn
Residential construction in Brooklyn was created to accommodate people who work in Manhattan, and the growing number of people working for the start-ups that were appearing all over Brooklyn itself. With a good combination of affordable and luxury housing being built in Brooklyn, it soon became desirable for people who work in Brooklyn to live there as well.
Residential developers are attracted to the open land in Brooklyn, and the existing neighborhoods. Brooklyn itself has laws and regulations that developers have to work through to get projects approved, but the effort spent to get projects off the ground is well worth it to developers who know that they will fill their units before their projects are even finished.
Commercial Construction Trend Taking Over Brooklyn
Manhattan is a global business center that requires a lot of large buildings to accommodate its huge business community. Even with all of its start-ups and growth, Brooklyn’s business community still pales in comparison to Manhattan. But when you look at the most recent approved projects for Brooklyn, it looks like businesses are choosing to base their companies in Brooklyn instead of Manhattan. What is causing this trend?
There are two reasons why commercial construction is taking place in Brooklyn and not Manhattan. For one thing, it is extremely expensive to build a building or rent an apartment in Manhattan. The average rent in Manhattan is approximately $4,146 per month, while the average rent for a comparable unit in Brooklyn is $2,705.59 per month. Paying more to live in Manhattan is just not as attractive as it used to be when Brooklyn is home to so many new residential units.
When you look deeper into the Manhattan land development issue, you can come up with a major reason why rents are so high. Yes, Manhattan is a trendy place where people expect to pay high rents, but Manhattan is also running out of land. The borough of Manhattan has been developed to the point where only small bits of land here and there are available for development. Much of the abandoned properties in Manhattan have already been converted to residential housing, which leaves little to no room for more commercial development.
The lack of new land in Manhattan and the need for accommodating more businesses in New York City is a perfect storm for Brooklyn. Not only is there plenty of land ripe for developing in Brooklyn, but the massive improvements made throughout the borough over the past few years are making the entire area more appealing to businesses and people looking for a place to live. As more businesses build in Brooklyn, it threatens to unseat Manhattan as a prime area of development.
An Adequate Alternative In All Aspects
Will Brooklyn overtake Manhattan as the global business center of New York City? While nothing is impossible, it is hard to imagine Manhattan losing its premier status anytime soon. However, Manhattan is making it almost impossible for developers to put in new commercial structures that will meet increasing demand. More and more projects that would normally take place in Manhattan are starting to get approved in Brooklyn, and the momentum is not stopping anytime soon.
Whether it is a new build on a vacant lot or refurbishing existing structures, Brooklyn is seeing a boom in construction that it has not seen in a long time. Not only is this rise in construction monumental for Brooklyn, the fact that some of the development is being done at the expense of Manhattan is also something very new. But with dwindling options in Manhattan and more businesses trying to make their homes in New York City, Brooklyn is offering itself as a more than adequate alternative.
All of this development is good for New York City in general. Instead of commercial development being dominated by Manhattan, there is now competition for Manhattan property owners to consider. Could the competition from Brooklyn cause Manhattan property owners to lower their rents? Considering that tenants are still flocking to Manhattan despite its high residential rental rates, it should not be expected that this type of competition is going to result in lower rent rates in either borough.