Brooklyn Proves Resilient During Pandemic Recovery
Founder and CEO of The Raisner Group (formerly Proteus Capital Management), a private real estate investment firm in New York City.
New York City has suffered deeply from Covid-19. Its economy was destroyed, people fled in droves and the population registered over 30,000 deaths. Nevertheless, the Big Apple is beginning to make a strong comeback: A large share of its population is now vaccinated, businesses have reopened, new businesses have made their debut and inhabitants are returning, mostly from Florida. Lured by the lowered rent prices and the spring excitement, there is a wave of “new” New Yorkers moving to the city.
As we recover from Covid and real estate business activity starts to pick up, Brooklyn provides a unique opportunity for investors and homebuyers alike. Covid has accelerated all trends and brought the future faster. Brooklyn’s momentum shows clear signs of lasting, and 2021 should be an excellent vintage for investors to jump back in.
New York’s grittiness will allow it to recover and grow from the pandemic, and with regards to Brooklyn, it is already well on its way. The borough’s 2.5 million inhabitants have fared better than Manhattan in several ways since the March 2020 shutdown. First, its residents are more rooted in their community and stayed in New York in greater numbers than in other parts of town. Because of this, Brooklyn never saw the mass exodus and the lack of everyday services — due to the number of shops going out of business — that Manhattan did. Additionally, falling CRE rents combined with the federal government’s economic stimulus created a retail boom. For instance, Bushwick has seen countless cafés, wine stores and fashion outlets open up since last fall — a truly rapid and unexpected development. It is a different neighborhood than it was 18 months ago.
For many, the new New York City is in Brooklyn. For less than the price of Manhattan, Brooklyn offers larger apartments, fully amenitized and often with individual outdoor space — all in all, a more laidback lifestyle in the middle of the fastest-paced city in the world. This is a great option for those who are going to work from home several days per week and gradually go back to the office.
To some extent, the borough offers a more European lifestyle. This isn’t surprising considering the borough was heavily influenced by Dutch immigrants. Amsterdam’s canal-facing houses are very similar to Brooklyn brownstones, with wide windows letting sunlight in on the parlor floor, and that parlor floor being duplexed featuring a large living room with a full kitchen behind. With the work-from-home phenomenon here to stay, this European way of life is the future of urbanism in America.
Brooklyn also has a strong culture and art scene. With lower rents due to Covid, artists have moved back to the area, reviving the underground scene. How cool? And perhaps most exciting, in the middle of the financial capital of the world, Brooklyn is developing into a stand-alone leader of the world’s latest and most promising industry: cryptocurrency. Recently, ConsenSys, an Ethereum development studio based in Brooklyn, raised $65 million in venture capital backing from the likes of JPMorgan, UBS and Mastercard.
But Brooklyn has always been a leader in innovation. A little-known fact is that Pfizer, the pharmaceutical company with the most effective Covid vaccine, was founded in Williamsburg. What a coincidence, that in the day and age of coronavirus, the former Pfizer plant is now being developed as a startup hub?
More and more, the pandemic has shown that individuals and families think differently about the concept of home. More and more, we’ve seen comfort, neighborhood life and personal touches gain importance. In the same fashion that Brooklyn has become a world-class brand, real estate investment companies can look to create their own brands and leave a unique mark on an industry in which smaller names are still recognizable.
The real estate brand of the future will feature many elements found in Brooklyn: character, proximity to customers, personalization, inclusiveness and quality, stylish offerings. It will be involved locally, hire locally and consume locally with a longer-term mindset than in the past. Brooklyn is a vibrant area that has thrived on the rebirth of neighborhood life and has taken the opportunity to evolve with the public health crisis. As the economy opens up and is expected to boom, it shall continue to do so, most likely in surprising ways.
We in the industry like to think of real estate as a cyclical business. The prior cycle saw the “rebirth” of the borough and featured extra innings. Nevertheless, the fundamentals are still strong. Many like to invest in the early years of an upswing. Hence, the Covid downcycle seems to provide unique timing to invest in Brooklyn. Despite the recent success, the borough’s economy can develop even more, with a real estate market that will follow.
And the Nets are winning this year!
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