North Brooklyn News - by Jason Moskowitz

A strong March jobs report was the silver lining for national economic news last month. U.S. employers added 431,000 jobs in March, and unemployment was down from 3.8% in February to 3.6% in March. The U.S. economy has recovered more than 90% of the 22 million jobs that were lost at the peak of the pandemic. While this is good news for the American worker, along with continued rise in wages, it is less so for the Federal Reserve, which is waging a battle against inflation. Rising wages and seemingly endless consumer demand continue to place tremendous upward pressure on prices on everything from clothes to food to fuel. Latest indications are that The Fed anticipates raising interest rates as many as six times in the coming months in an attempt to combat the rising cost of goods and services. 

Also released in April was a very encouraging annual construction report for New York City, produced and released by YIMBY. For the calendar year 2021, NYC as a whole saw an increase in permits filed for all new structures, of 14% over 2020's filings. Breaking down the number by borough, Brooklyn was second only to Queens in new filings, with 28% of all the city's filings. Perhaps more interesting is the nature of these filings. Brooklyn's average filing increased from 23,630 s/f in 2020 to 36,883 s/f in 2021, representing a 56% increase, indicating that developers are planning larger projects, as they believe that the demand for space in the borough will continue robustly for the foreseeable future - as noted in this column monthly. Of course, this wouldn't be the New York City of the 2020's if developers did not continue to face adversity from state and local politicians.

A major headwind that is increasingly worrying developers is the fate of the much utilized "421-a" tax abatement, and Gov. Hochul's proposed replacement, "485-w". State legislators have officially left the controversial tax abatement incentive off of this year's $220 billion budget. This does not conclusively indicate a death knell for the program, but it does put it's future in jeopardy. If a new program isn't agreed upon by the current one's expiration in June, many developers will be unlikely to continue to build new affordable housing supply. Taking into account the fact that rent-stabilized asset income dropped by nearly 8% in 2021, representing the biggest dip in that category in 17 years - without a tax incentive to offset developer's operating costs, building large-scale affordable housing options would become an even more challenging undertaking than it is currently. In related news, potentially offering current rent stabilized owners slight relief, the Rent Guidelines Board released its report this month recommending rental increases of between 2.7% - 4.5% on one year leases and 4.3% - 9% on two year leases. Compared to an average annual increase of 1% under the de Blazio regime, this is certainly welcome news for owners of this property type. A better option would be to reinstate price increase incentives that were stolen with the passing of the 2019 Rent Stabilization Law, but for now owners will have to hope for small victories until larger ones become a realistic possibility once again. A final decision on the allowable increase is expected in May. 

In other local news, Gov. Hochul's proposed Interborough Express will be open for public discussion when the MTA holds a virtual town hall on May 19. Adding this 14-mile rail or bus line, running from the Brooklyn Army Terminal to Jackson Heights, with 17 stops along the path would be an exciting endeavor for the two boroughs.

And finally this month, some much welcome news from the local retail sector: In a report released by CoStar News, the North Brooklyn retail market has seen vacancies decline and rents rise faster than any other sector of NYC. The vacancy rate has been reduced to a current level of 3.1%, compared to a city-wide average of 4%. 

Local Deals of Note:

Williamsburg  

• 429 Kent Ave. - $45 million Inventory Loan was Obtained by the Developer of this Condo Project
• 310 North 7th St. – Permits were filed for an eight-story residential property, with a small commercial component
• While not exclusive to W’burg, The Lefrak Organization has agreed to sell its multifamily portfolio to A&E for $250 million

Greenpoint

• 65 Eckford St. - Permits were filed for a 20,000 s/f residential tower, consisting of 24 units and 21 enclosed parking spots. 

Bushwick

• 71-83 Beaver St. – A series of zoning texts were amended so as to allow for the redevelopment of the property.  Final numbers haven’t been released, but when completed, the property will house mostly residential units and be known simply as “81 Beaver St..”
• 1333 Broadway – A joint venture agreement was reached to develop a 20-story, 30,000 s/f mixed use project, that will house 107 units and 50 parking spots.

Until next month, fill those vacancies, collect those rents, and stash some reserves.