The supply and price growth of new condominiums in Brooklyn moved at a faster pace than those in Manhattan in the second quarter of 2016, according to a report released Friday.
The report by Halstead Property Development Marketing found that available new development inventory in Brooklyn stood at 864 units, a 14% increase from the first quarter. This compares to a growth of 9% for Manhattan, which had 4,409 units currently on the market or yet to be released.
Stephen Kliegerman, president of Halstead Property Development Marketing, said the new and higher quality developments in Brooklyn are attracting not only Brooklynites who are transitioning from rentals to sales, but also Manhattanites who are discovering housing amenities, access to transportation and exciting neighborhoods at attractive prices across the bridge.
“Brooklyn has become a very desirable borough to live in,” said Mr. Kliegerman.
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The borough is also attracting foreign buyers, who now make up around 10% of the new development market, estimated Mr. Kliegerman. International buyers are coming from different parts of the world, including China and South America, who are either purchasing purely for investment, their own use or for a relative, such as an adult child going to school in New York, according to him.
Brooklyn is also popular with Europeans, who find a familiarity to home in the borough’s brownstones and small shops, said Mr. Kliegerman. As a result, he expects British buyers looking for more affordable luxury prices and safer havens after the Brexit vote to start considering Brooklyn.
New development inventory (in units) and prices in the 2Q
| Brooklyn | Manhattan | |
| Inventory | 864 | 4,409 |
| Ave. Price Per SQ. FT. | $1,356 | $2,547 |
Source: Halstead Property Development Marketing
Mid-market tier sees most activity
In looking at contracts for new developments signed, the most popular tier of the market for Brooklyn was the one encompassing properties priced between $1 million and $3 million. Deals within that range accounted for 59.2% of all contracts signed in the borough during the second quarter of 2016, up from 47.1% in the first three months of the year. The mid-market tier also accounted for more than half —51.3%— of all deals signed in Manhattan.
As far as unit type, buyers in Brooklyn preferred two-bedroom apartments, with 42 apartments entering into contract or closing, and new condominiums concentrated in three neighborhoods: Williamsburg, Prospect Heights, and Boerum Hill.
And while prices in Manhattan are still around double that of Brooklyn, Manhattan’s growth remained essentially flat at $2,127 per square foot. Conversely, the average price per square foot for new development units entering contract grew to $1,369 in Brooklyn, an increase of 3.4% from the first quarter and up 3.7% from a year ago.
However, deal volume in Brooklyn remained flat year-over-year, while in Manhattan, it grew 28% in the second quarter of 2016 as compared to the same period last year, according to the Halstead report.
Manhattan closings skyrocket
A separate reading by brokerage Brown Harris Stevens, covering only Manhattan, shows that the number of new-development closings in that borough increased by 59% year-over-year in the second quarter, unaffected by new record prices. The average closing price for a new apartment was almost $3.8 million, up 28% from the same three-month period in 2015.
South of 14th Street had the largest share of new development closings, accounting for 26.2% of the total, according to Brown Harris Stevens.
MORE:U.S. Home Prices Grew at Strong Pace in April
Looking forward, Mr. Kliegerman forecasts continuous price growth for Brooklyn, which unlike Manhattan, is still a maturing market, he said.
“Over the next 12 to 18 months, you’ll see the next wave of developments, and the further maturation of the Brooklyn marketplace,” with prices increasing by 20% to 25% from its current levels, Mr. Kliegerman said.