HOUSING MARKET TRENDS IN DOWNTOWN BROOKLYN

Building owners cite many factors that make Downtown Brooklyn favorably positioned for continued growth. Downtown Brooklyn’s foundation is the excellent transit access from over a dozen subway lines and the Long Island Rail Road. Factors that make Downtown Brooklyn an attractive place to live include its cultural and retail assets, walkability to surrounding brownstone neighborhoods, and new construction with highlyamenitized offerings. Interviews with real estate teams confirmed this demand dynamic; new residential buildings in Downtown Brooklyn served the best of both worlds by offering new construction and amenityrich product within walking distance to the waterfront, world-class parks, and many popular neighborhoods like DUMBO, Cobble Hill and Fort Greene.

Landlords indicated that a large share of residents work in occupations such as finance and tech in Manhattan. Based on pre-pandemic Census data, almost twothirds of all employed residents work in Manhattan, with roughly 17% working in Brooklyn and 7% working from home. Of these workers, over 85% commuted to work by public transit, walking or biking. Since the pandemic, 2021 Census data shows that almne-quater (22%) of residents now work from home now, with 70% now commuting to work by public transit, walking or biking.14 This data also correlates with observations shared by several property managers who estimate 20-30% of their residents work from home based on usage of coworking lounges and rush hour foot traffic. Some buildings are adding coworking lounges for residents as a result of changing these lifestyle needs and preferences.

Since 2018, 1,823 new affordable housing units have been delivered in Downtown Brooklyn, representing nearly a quarter of all new units that have been built during that timeframe. Out of all affordable housing units created since 2004, almost half (46%) have been built in the past five years. As of 2022, more than 2,400 additional affordable units were under construction and planned.15 According to developers with newly constructed affordable housing units in Downtown Brooklyn, demand has been extremely high for affordable units. One owner reported having over 80 applications for every affordable apartment, demonstrating the dire need to continue developing affordable units.

In addition to providing incentives for affordable housing development, the newly expired 421-a program was a vital tool for making residential development viable. Between 2010 and 2020, nearly 50,000 new residential units completed across all of Brooklyn received 421-a (comprising 75% of all completed units in Brooklyn).16 Within Downtown Brooklyn, 421-a was used for 14 out of 18 rental buildings built from 2018 to 2022, accounting for 4,169 units, which represents 83% of all rental units built within this timeframe (not including entirely affordable buildings at 90 Sands, 50 Nevins and 112 St. Edwards).

The impending expiration of 421-a in June 2022 resulted in a number of projects filing for building permits in order to qualify for the incentive. This was particularly evident in Downtown Brooklyn, where ten residential projects (totaling over 4,371 total units, of which 1,344 are affordable) broke ground in the sixth month period before 421-a’s expiration.17

Over 1,300 residential units were completed in early 2023, with an additional 5,500 units under construction and 1,600 units in the pipeline. Based on our calculations, due to continued demand and construction, the population is forecasted to grow by an estimated 13,500 people by 2027.18

High occupancy levels, short absorption timelines, and rising rents indicate that demand has outpaced new housing supply over the past five years. Given the strong and growing demand for housing in Downtown Brooklyn, future housing developments will continue to help address the housing crisis by delivering critical supply near desirable neighborhoods, mass transit and job centers.

14 U.S. Census Bureau (2018 - 2021 ACS 5-Year Estimates, 2000 Census), study area 15,18 Downtown Brooklyn Partnership (DBP), Downtown Brooklyn Development Matrix, 2022

16 NYU Furman Center: The Role of 421-a.

17 Department of Housing Preservation and Development (HPD): Affordable Housing Production by Project.