Connect Webinar Provides Insiders’ View of Rental Demand Drivers in NY Outer Boroughs

For an indicator of the outer boroughs’ appeal to apartment renters, consider the preferences expressed by Arch Companies’ younger employees. Citing Ridgewood in Queens and Bushwick in Brooklyn, among other neighborhoods, managing partner Jeff Simpson told a Connect CRE webinar audience, “These markets are established markets, and there are people in my office that love living in one of them. They don’t want to live in Manhattan.” 

As another case in point, there’s the performance of Douglaston Development’s multifamily properties during the pandemic. ”The pandemic obviously came out of nowhere and was something that none of us had ever seen before,” said Douglaston CEO Jed Resnick during the ”NY Outer Boroughs Multifamily Update” webinar. ”But one thing we saw very clearly was that outer borough demand, particularly in Brooklyn, held up better than our Manhattan assets.” 

Occupancy never dropped below 87% in Douglaston’s Williamsburg properties, whereas vacancies neared 40% of market-rate units in the firm’s 80/20 buildings in Manhattan, Resnick said. 

The pandemic has had effects on both work arrangements and residency that are likely to be with us for awhile. At FirstService Residential, Marc Kotler, SVP of the management firm’s new development group, noted that since his company opened One Boerum Place in Brooklyn Heights to renters, demand has been “extremely high. And I think it’s because the developers have conceptualized these buildings and highly amenitized them to create environments where people can live there and work at home. The outdoor space, the indoor space is all conducive for setting up a laptop and doing your work.” 

To Kotler’s point, Resnick recalled that early in the pandemic, Douglaston received inquiries about whether it would reconfigure apartments to accommodate the work-from-home model. Initially, the answer was no, “because when all of this clears up, tenants won’t pay for work-from-home space. In the past, if it couldn’t be a bedroom, they weren’t paying for it. That thinking has evolved because COVID or no COVID, the hybrid work model is absolutely here to stay.” 

Moderated by Mark Davis, principal broker and managing director of Southwell Realty Capital, the 45-minute discussion also covered the outlook for new supply, the financing climate for both acquisition and development as a possible recession looms and the long-term future of New York City. (Spoiler alert: On the latter point, the panelists were optimistic.)

On-demand replays of the webinar will become available on Thursday, Oct. 13.