Remy Raisner is the Founder & CEO of The Raisner Group, a Brooklyn-focused Real Estate Private Equity company.
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Two and a half years after Covid-19 pummeled New York City, it is hard to think that Brooklyn has suffered. On the contrary, it has been the Big Apple’s Miami: It has thrived with the pandemic. Now, Brooklyn clearly sets the stage for a new era of real estate and urbanism in New York City.
Manhattan is not “back” to its pre-pandemic self, and realistically, this will take several years. Solely 40% of its workforce is back in the office, and subway ridership hovers around 60% of pre-March 2020 levels. And often overlooked, between the strong U.S. dollar and significant real inflation, New York has become perhaps the most expensive city in the world. Hence, tourism is slow to come back; many globally cannot afford it.
Nevertheless, lightning-fast-growing Brooklyn, the most populated borough, is currently back at its 1950s population all-time high, with over 2.7 million inhabitants. It grew 9.1% in the 2010s. During the past decade, Brooklyn’s private employment grew 47.5% (faster than the citywide rate of 28.7%). Certain areas like Bed-Stuy experienced private employment growth of over 100%. Median income per household rose by close to 60%, and the poverty rate declined 4.2 points.
In the 10 years before Covid-19, Brooklyn transformed from a neglected, industrial area into a vibrant technology and innovation center, while keeping some hubs for manufacturing activity. After the height of Covid-19, in the blink of an eye, Williamsburg is becoming Soho, and Bushwick is becoming Williamsburg.
The economic growth now seems to accelerate, and there is much beyond the numbers. When New York locked down, Manhattanites left the city in droves, but many Brooklynites remained. Therefore, local cafes and stores thrived, not only because they kept their client bases but also because government stimulus dollars increased their purchasing power. Additionally, local businesses were able to generate further revenues from measures allowing outdoor seating, and expanding their physical capacity to serve customers. And furthermore, the sudden popularity of delivery services like Grubhub and UberEats created a new distribution channel for Brooklyn businesses. Today, you may find many are opening second and third locations.
Another important factor leading Brooklyn to flourish: After the pandemic and lockdowns, inhabitants of major U.S. cities have increasingly sought out community life. And nowhere is it more available and prevalent in New York than in Brooklyn, with its numerous blocks of 1900s three-story brownstones and local shops, old and new, that have established deep roots in their neighborhoods. Not in Manhattan, which over time became a “playground for the rich” with glass towers and luxury shopping malls, nor in Queens, which many consider a “patch up” of neighborhoods and populations.
In many ways, this validates the theories of famed urbanist Jane Jacobs, famously depicted in Edward Norton’s movie Motherless Brooklyn, who advocated for building and developing cities harmoniously by empowering local residents. Brooklyn today exhibits inclusiveness and diversity that has high appeal for anyone seeking a community in which to establish him- or herself. This highlights that smart and sensitive urbanism is the best business decision for private developers and investors—as well as for policymakers.
Besides, Brooklyn can provide tremendous value to its middle-class population, which is not only the largest population segment but also the backbone of any city. The borough’s strength lies in providing large, high-quality apartments, oftentimes renovated and featuring amenities, for a lower price than in Manhattan. The real estate backstory to the last 10 years in New York is that, as Manhattan real estate became untouchable for most, many landlords of rental buildings grew complacent, not feeling a need to upgrade any of their properties. More entrepreneurial Brooklyn landlords started offering a compelling alternative that grew, at first quietly, and then very noticeably.
Over two years after the start of the pandemic, and despite the recent Federal Reserve announcements, Brooklyn real estate benefited from covid-driven demographic shifts. Rental prices are significantly higher than pre-covid, and values rose 20%-30% since then. Quite rewarding for an area already called America’s “neighborhood with the wildest gains in home values” in 2016—hence demonstrating strongly the values of long-term ownership for investors.
All in all, Brooklyn is setting the stage for the reality of the next era in the Big Apple. The 2010s were marked by record-setting glass towers, Hudson Yards and Billionaire’s Row. After the divisiveness of the last decade, Brooklyn offers a positive, refreshing and highly sought alternative. This bodes well for New York, especially after the pandemic. I believe the city needs to restore the inclusiveness that made it the most vibrant in the world. As local developers and investors notice, they will be poised to help deliver a more community-oriented lifestyle, rebuild the fabric of New York and assist in healing its class warfare wounds of the past. And as developers and investors take note nationwide, you can likely expect more coherent cities across the country and improved urbanism, leading to a stronger society.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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