Last year in Brooklyn, investments in offices quintupled, while the sale of land and multifamily homes dropped.
A recent report from Ariel Property Advisors found that in 2017, office deals in Brooklyn increased 553 percent from the year before to an incredible total of $757 million. The huge volume could be attributed to two major deals in the borough: CIM Group’s purchase of 16 Court Square from SL Green Realty for $171 million, and the acquisition of a stake in the Dumbo Heights office portfolio by RFR Realty and Kushner Companies worth $408 million.
According to The Real Deal, “On the whole, the office sector — which accounted for 12 percent of Brooklyn investment dollars — was not enough to tip the scales for the borough. The dollar volume of deals was down 19 percent from the previous year, totaling $6.37 billion. With 1,111 deals, the average trade was $5.7 million, down from $5.9 million in 2016. Meanwhile, multifamily sales amounted to $2.72 billion, a 35 percent decline from the previous year and 40 percent dip from 2015. Dollar volume for development and industrial sites fell 30 percent to $2.18 billion. Pricing for those two asset classes also slipped for the first time since 2012. Land prices decreased to $248 per buildable square foot from $262, a return to 2015 levels, and price per multifamily unit slipped to $316,000 from $326,000. However, the price per square foot in multifamily deals rose to $388 from $376.”
An increase in investments by the education and medical sectors helped special purpose deals experience gains. In 2017, there was the resolution of two big areas of uncertainty for investors, which could mean an added bonus for buyers of commercial real estate. The two areas were: tax reform and the reinstatement of the 421a subsidy.
By Charles Bernstein