Former New York Governor Eliot Spitzer stands inside his under-construction Brooklyn rental project and takes in the view. There’s the panorama of Manhattan’s skyline to the front, the Williamsburg Bridge to the right. And to the right of that is a competitor’s mega-development promising 2,800 more apartments.
Spitzer, now head of his family’s real estate company, is building his first apartments at a time when other developers are also filling Brooklyn with rentals. He’s delivering 857 units across two towers in New York’s hippest and most populous borough, where the apartment supply has been expanding for two years and rents have declined in nine of the past 12 months.
The former politico is taking a long-range view of his project on the Williamsburg waterfront, known as 420 Kent, where rents are projected to start at $2,400 for a studio. The market may be soft now, but the views, and his investment horizon, are forever.
“My family’s been building buildings in New York for 60 years, and we build to own over multiple generations,” Spitzer, 58, said on a tour of the site. “The fluctuation of this month over next month, and a bit more supply coming on now, versus last year, is not consequential.”
Brooklyn’s post-recession construction boom has been all about rentals, with developers seeing the potential to charge ever-higher prices as neighborhoods gentrify. Now, with a proliferation of high-end projects featuring yoga rooms and party roofs, landlords are offering discounts and free months to keep their units from going empty. Brooklyn tenants paid a median of $2,851 in August, 0.3 percent less than a year earlier, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Rents peaked in May 2016 at $2,973.
‘Challenging Time’
About 3,083 newly built apartments are expected to reach the Brooklyn market between now and the end of the year, according to Nancy Packes Data Services, a New York residential research firm. Next year, another 1,986 will be listed for rent.
“It’s a challenging time in terms of supply, and concessions are here to stay for a while,” said Jonathan Miller, president of Miller Samuel. “You’re looking at years -- not quarters or months.”
Along the same Williamsburg street as Spitzer’s development, an eventual 2,800 rentals are planned at the site of the defunct Domino Sugar factory. Farther north, Greenpoint Landing is expected to bring 5,500 new apartments.
The tsunami of supply matters less to rental projects than it would for condo buildings, where timing the market is more important, Spitzer said.
“If you’re building rentals for a 50-year time horizon, it’s a very different proposition,” he said.
Spitzer took over the family business in 2014, six years after resigning as governor in the wake of a sex scandal. In addition to 420 Kent, he’s planning an apartment and office project on West 35th Street in Manhattan’s Hudson Yards area, on a parcel the firm bought for $88 million in 2013.
Beach Volleyball
The Williamsburg project, to begin leasing next spring, will have amenities such as a beach volleyball court, two swimming pools, a demonstration kitchen and communal piano -- “the usual,” said Charles Morisi, an executive with Spitzer Enterprises who oversees the project. All apartments will have floor-to-ceiling windows, the better to showcase the views, according to Spitzer.
“The only possible reaction is, ‘That’s amazing,’” Spitzer said. “With views like this, we’re going to do fine.”
One-bedroom rents are likely to start at $2,800, with two-bedrooms estimated at $4,500 to $6,500, said David Maundrell, who oversees marketing of new developments in Brooklyn and Queens for brokerage Citi Habitats. “A couple of very unique, very large apartments,” with space for a formal dining area, will rent for $7,000-plus, he said.
Access to the project doesn’t depend on the L train, scheduled to shut down in April 2019 for 15 months. That should appeal to the well-heeled entrepreneurs and Wall Streeters who are likely to populate the apartments, according to Maundrell.
“‘You may find someone in the finance world, and he takes the J, M, Z train to Wall Street every day,” he said. “But on the weekend, you see him, he has a half-sleeve tattoo that his boss doesn’t even know about. They will live here.
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