Sales of Mixed-Use Developments Rise
Mixed-use developments in Brooklyn are on the rise, as more builders view them as a safe investment option in uncertain economic times, according to a recent study and interviews with brokers.
"Across all market types, mixed use is excelling" in the borough, a senior partner at Massey Knakal, Timothy King, said.
The number of mixed-use buildings, which includes developments with both residential and retail usages or a hotel component, increased by 7.5% in Brooklyn during the first half of 2007 compared with the same period in 2006, according to a Massey Knakal study titled "New York City Income Property Market Report."
Meanwhile, walk-up apartment building sales decreased by 10% compared to the year before and elevator apartment buildings were down by about 25%, the study found.
The increasing population of Brooklyn and expansion of residential neighborhoods into previously industrial areas is fueling the growth of mixed-use building sales, Mr. King said.
"The number of retail corridors is increasing and the rents are increasing," he said. "For the first time since the '70s, the Brooklyn birth rate exceeds the mortality rate and more people are moving out here than leaving. Consequently, you've got the ability to put stores where it never made economic sense before."
A vice president at Toll Brothers, David Von Spreckelsen, said developers in New York are diversifying their real estate product types because of market uncertainty.
"Whereas some people were doing 100% condo, you'll now see a hotel or a rental component," he said, adding that the extra revenue from retail or commercial aspects of the building makes more sense when a market has "some uncertainty."
While the number of deals dropped for two of the three categories in Brooklyn, median prices rose, according to the report.
Elevator buildings had a 16.4% increase in the median price per square foot compared with 2006, and walk-up apartment buildings increased by 4.4%, the report found. Mixed-use prices were up the least, 3.8%.
