By Holly Dutton
Overflowing with over-educated and underpaid young “pioneers,” rapidly growing Bushwick is right behind Williamsburg in line to be the next hot neighborhood, according to real estate experts.
As North Brooklyn continues to be one of the hottest topics in New York City real estate, sales in waterfront neighborhoods Williamsburg and Greenpoint soared in the first quarter of 2013, while further east, Bushwick retail prices are going nowhere but up, according to real estate firm Massey Knakal.
The findings are bolstered by retail numbers showing price per square foot jumping 250 percent in the last six to nine months, from around $15 psf to the $30’s and $40’s, said Michael Amirkhanian, director of sales at Massey Knakal.
In Williamsburg, major retailers Urban Outfitters and Anthropologie both signed leases in the first quarter, while luxury fitness chains Soul Cycle and New York Sports Club have taken space on Kent Avenue and North 4th Street, respectively.
Asking rents on the main thoroughfare of Bedford Avenue are $225 psf while on nearby Wythe Avenue rents are $130 psf, said Amirkhanian.
The firm presented a diagram of retail leasing and the process of gentrification during a 1Q presentation showing Bushwick in “Phase 1” of the three-phase process, with Williamsburg in Phase 2 and SoHo in Phase 3.
An influx of what the diagram calls “pioneers” are the first to open independent, trendy stores and restaurants as artists move in and attract cultural events and galleries during Phase 1.
“The L train has been a huge catalyst,” said Amirkhanian about the booming growth pushing east from Williamsburg to Bushwick.
In another sign that Brooklyn is becoming the new frontier, Massey Knakal Chairman Bob Knakal said more than a third of Massey Knakal’s employees now live in Brooklyn.
Investors are seeing the potential – purchasing large warehouses with the intent to reposition the asset and ultimately net high returns from the investment.
“There’s a huge pocket of opportunity in these areas,” said Amirkhanian.
Large warehouses in Bushwick that ran $12 to $13 per square foot are being repositioned and asking $25 to $29 per square foot, while a Massey Knakal project poised to come online in late 2013 or 2014 at 74-92 Bogart Street in Bushwick is asking rents in the $30’s and $40’s, said Amirkhanian.
The 80,000 s/f warehouse is an entire city block, consisting of 1200 feet of wrap-around frontage along Bogart Street, Ingraham Street, Morgan Avenue, and Harrison Place.
Despite the expected downturn of numbers in the first quarter following a jump in sales in the fourth quarter of 2012, executives with Massey Knakal have a positive outlook on first quarter results, and for the rest of 2013.
“Interest rates are driving everything,” said Knakal, referring to the current record-low interest rates. “It’s like rocket fuel for this marketplace.”
The 4Q of 2012 saw 1,677 properties sold in NYC, while in 1Q 2013, 559 properties were sold, compared to 615 in the 1Q of 2012, a decrease of 9.1 percent.
However, the firm reported sales activity in the 1Q 2013 was better than expected given the “hyperactivity” in the 4Q 2012 and expects the property sales pace to pick up during the year.
Only the 1Q of 2007 had higher sales volume than the 4Q of 2012, according to Massey Knakal research.
“We are positive,” said Paul Massey, CEO and founding partner of the firm. “We were less positive last year.”