In late February of this year, a sprawling duplex set between Brooklyn’s waterfront Dumbo district and historic Brooklyn Heights entered the rental market with an eye-widening $36,000 per month price tag. Even in a city where rents have risen to record numbers since the waning of the pandemic, the sum was among the highest in the borough’s history. But no matter: after barely a month on the market, the 3,200 sq ft apartment found a tenant — at the full asking price.
“It was a very unique space, with a backyard and basketball court; I’d never seen anything like it,” says the renter, a currency investor with a young family who prefers to remain anonymous. The apartment, he adds, also works as a gathering place for his remote workers, “to get together every quarter in New York” and reconnect with each other.
No segment better reflects the seemingly unending increase in New York housing prices quite like Brooklyn’s high-end rental market. At a time when rents are surging in all boroughs — and at nearly all price points — the top 10 per cent of Brooklyn rental apartments are outpacing them all. While $36,000 listings remain rare, the number of highly priced Brooklyn rentals is is noticeably higher than before the pandemic.
In the first three months of 2020, there were eight listings above $18,000, according to a Brown Harris Stevens report on Brooklyn’s luxury sector (which begins at a far more modest $5,800 per month). By the second quarter of 2021, that number had risen to 26 — with an average price of nearly $29,000.
“Before the pandemic, [highly-priced rentals] might have sat on the market for six months, but now they’re rented within weeks,” says Christopher Thomas, vice-president in Brooklyn Heights at Brown Harris Stevens. “Often there’s bidding wars, especially for town houses,” he adds.
Jonathan Miller, president of real-estate appraiser Miller Samuel, calculates that 28 per cent of luxury Brooklyn homes are now renting above their listing price, more than twice the figure for luxury rentals in Manhattan.
“There was an expectation last summer that rents would stabilise,” says Miller. “But they’re still inching upward every single month.”
Keeping those prices climbing is a collision of economic conditions — high inflation, rising interest rates and fears of house price falls — and a low inventory of available units. And because Brooklyn’s appeal endures. “I lived in Manhattan for almost a decade and Brooklyn is just a much nicer, safer and cooler place to be right now,” says that $36,000-per-month renter.
With its grand parks, waterfront areas and some of the best private schools in all of New York, “Brooklyn is like moving to the suburbs for those who don’t really want to move to the suburbs,” says broker Lindsay Barton Barrett, a Brooklyn specialist with Douglas Elliman real estate.
The strongest driver behind Brooklyn’s rental spike is rising US mortgage costs: the average rate for a 30-year fix was 6.27 per cent last week, a little less than double what it was at the start of 2022. “People who would have bought are now being pushed into the rental market,” says Miller, who notes that in tandem with rising rents, the number of homes sold in Brooklyn dropped nearly 20 per cent at the end of last year compared with 2021.
Miller adds that more than 60 per cent of Brooklyn’s luxury renters are signing two-year leases, a clear indication, he says, “that folks expect rents to rise even further” and interest rates to remain robust.
Brooklyn is big, three times the size of Manhattan and with nearly 50 per cent more residents. But “prime” Brooklyn is relatively compact: mostly the borough’s northernmost neighbourhoods such as Brooklyn Heights, Cobble Hill, Fort Greene, Carroll Gardens, Park Slope, Dumbo and parts of Williamsburg. All are relatively close to Manhattan, many are riverfront and most are lined with the gracious brownstone town houses that have lured families to Brooklyn for generations.
Most crucially, despite substantial amounts of gentrification, these neighbourhoods — while offering quality schools, restaurants and shopping — are still far less expensive than Manhattan’s smartest quarters. According to a mid-April Douglas Elliman rental market report, the median Brooklyn luxury apartment rent stood at $6,800 per month. That might be 10 per cent higher than a year earlier, but nearly $4,000 lower than comparable rentals in Manhattan.
“You definitely get far more space for your money in Brooklyn,” says Kevin, who rented an upmarket apartment in Brooklyn’s Boerum Hill neighbourhood early last year and prefers not to divulge his last name. Although he’s currently paying at the low end of the luxury spectrum, he says his two-bedroom, two-bathroom apartment would be far costlier if rented today. “We got a good deal because we signed at the end of Covid, but all round us prices have climbed up.”
Beyond those rising mortgage rates, Brooklyn’s dwindling supply of top-end rentals is helping already pricey units reach even higher numbers. How tight is the Brooklyn market? According to a March Douglas Elliman report, the average Brooklyn apartment went from listing to lease in just 24 days — nearly half the time of just a month prior and two weeks faster than a year earlier.
“We have no available vacancies,” says Jeff Levine, whose firm Douglaston Development was one of the first to enter the Brooklyn luxury rental arena with a trio of towers on Williamsburg’s waterfront that have debuted over the past decade. “Someone moves out, and there’s an immediate waiting list to move in.”
Levine’s luxury towers may have been pioneering, but they’re no longer alone. Across the borough’s most affluent quarters, a clutch of high-end developments have entered the market aimed at the high-paying young families and professionals keeping Levine’s properties full.
Brooklyn Heights, for instance, will soon see two luxury rental developments arrive, The Torre House and 2 Pierrepont Street, both of which will probably appeal to finance professionals working on Wall Street just across the Brooklyn Bridge. They join recent nearby newcomers such as Magnolia Dumbo, which features a 23,000 sq ft park; while figures can vary quarter-to-quarter, Dumbo is considered to have the highest rents in the entire borough.
Ultimately, much like the rest of New York’s current rental market, observers say Brooklyn’s priciest sector will continue to surge thanks to pressure from both the top and bottom ends of the market. According to a report by the Real Estate Board of New York, the city needs a staggering 560,000 units of new affordable housing by 2030 to meet current demands.
With a mere 20,000 to 30,000 units completed each year, the need will clearly not be met — which will only add pressure to mainstream rentals and push their prices even higher. At the opposite extreme, limited townhouse and luxury rental inventory will mean rents at the top end of the market are also likely to see no sign of receding. “There are only two things that could bring prices down,” says developer Levine. “Changes that would allow us to build far more housing,” he explains, “or a recession which would impact employment numbers and decrease demand.”
At a glance
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The median rent in Brooklyn has risen by more than 17 per cent in the past year to $3,400 per month; compared with $4,095 in Manhattan.
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Some 2.7mn people live in Brooklyn (almost the same as all of Chicago), according to the 2020 US census.
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Like the rest of New York City, Brooklyn has seen an increase in crime since the beginning of the pandemic. But major violent crimes such as homicides and shootings have decreased markedly from their 2020 peak.
What you can rent . . .
Apartment, Carroll Gardens, $6,950 per month
A two-bedroom, two-bathroom apartment spread over two floors of a town house in Carroll Gardens. The 1,232 sq ft home has been recently renovated and features 9ft ceilings and white oak wood floors. Available through Corcoran.
Townhouse, Brooklyn Heights, $22,000 per month
A town house in Brooklyn Heights originally built more than a century ago and completely renovated. This four-bedroom home is arranged over four floors with a garden and two terraces. Available with Compass.
Penthouse, Downtown Brooklyn $32,750 per month
A four-bedroom, 3,125-sq ft penthouse at One Boerum, a condo development that was converted into high-end rentals. The property has panoramic views of Brooklyn and Manhattan. Available through One Boerum.
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