Brooklyn Developers Turn To Building Neighborhoods, Not Just Towers

Two decades ago, Atlantic Yards, now known as Pacific Park, was meant to be a connector of neighborhoods in Brooklyn. 

Today, it has only completed half of its vision, constructing nine out of the 15 promised commercial and residential towers on the 26-acre plot between Prospect Heights, Boerum Hill, Park Slope, Fort Greene and Clinton Hill. Last year, majority owner Greenland USA defaulted on $350M of loans tied to six development sites and stared down foreclosure, although the auction has since been postponed.

But the ill-fated project hasn't discouraged other Brooklyn developers. Instead, it has inspired them to learn from those mistakes in their projects. 

“I know it’s a lightning rod of a project to talk about,” RXR Executive Vice President of Development Rebecca D'Eloia said at Bisnow's Brooklyn State of the Market event Tuesday. “Certainly, when we talk about transformational projects, I have to mention that one because I think it was envisioned to be a connector between neighborhoods, which should be connected someday.”

In the past, Brooklyn developers would enter the borough guided by hip, young professionals, building near individual anchors but sprawling out across parts of the borough. As Kings County has diversified to include anyone from the Greenpoint bachelors to families buying Cobble Hill brownstones, developers have shifted to creating a more seamlessly connected Brooklyn, similar to Manhattan. 

“You see that there's a constant desire to be in Brooklyn,” Downtown Brooklyn Partnership President Regina Myer said during the event, held at the Brooklyn Navy Yard. “All of these neighborhoods are walkable now, all these neighborhoods connect, all these neighborhoods have transit.”

Sewing the neighborhoods together means diversifying the offerings in each area, rather than keeping the Bushwick warehouse clubs isolated from the Dumbo penthouses. 

Between Downtown Brooklyn and Fort Greene, RXR has opened the 34-story mixed-use tower The Willoughby and is in the midst of construction on the 30-story mixed-use project at 89 Dekalb Ave. 

The area is known for its upscale high-rises and landmark buildings, but D'Eloia said she has seen strong student demand in the neighborhood. That has led RXR to partner with Long Island University to include 55K SF of academic space in 89 Dekalb. 

RXR has also leaned into the arts corridor that snakes its way through the area, from Barclays Center to Fort Greene Park. Its projects are close to the Brooklyn Academy of Music, and it embraced the opening of Brooklyn Paramount, a 2,700-capacity music venue just around the corner from its buildings.

“I think it is a big draw for the type of lifestyle that folks are looking for when they come to our projects,” D'Eloia said.

Much has changed since plans for Pacific Park were first drafted, allowing projects like RXR's to flourish. 

Most notably, the population has grown from 2.5 million residents in 2000 to 2.7 million in 2020, making it not just the most populous borough but also roughly the same size as the city of Chicago, according to Census data. 

The median household income has also grown as new residents have moved in, rising from $56K in 2010 to $77K in 2022, according to the Furman Center. Park Slope, Cobble Hill and Dumbo have all developed as wealthy enclaves where strollers and dog walkers proliferate.

And though Brooklyn experienced outbound migration during the height of the pandemic, it has regained much of the population. 

Among Manhattan residents who moved in 2021, 20,000 went to Brooklyn, the most popular location. Another 19,000 went to Florida, sparking a rivalry, but 9,000 recorded their moves as temporary, according to a report by the New York City comptroller. 

Panelists said they continue to see more residents moving in from other states.

“Just from personal experience, when I graduated college, the idea was to come into New York City, to come into Manhattan,” HAB Bank Vice President of Commercial Lending Andrew Walsh said during the event. “Now the idea is to come to Brooklyn, into these new developments, new neighborhoods that they’re building.”

Williamsburg has emerged as one of the most prominent hubs for such new arrivals, largely due to the 2005 rezoning of a 175-block area of the neighborhood and nearby Greenpoint. As a result, the population has ballooned from 146,000 in 2010 to 187,000 in 2022, according to the Furman Center.

Williamsburg has 135 active and recently completed development projects greater than 25K SF, The New York Times reported. Most of those projects have been residential. Over the last decade, more than 17,800 units were built in the rezoned area, according to the Furman Center.

But Two Trees Managing Director of Leasing Alyssa Zahler said its office project has been successful specifically because of that void.

The developer’s Domino Sugar Factory redevelopment has continued to secure tenants through the pandemic, resulting in its 60K SF of pre-built suites reaching 70% leased, Zahler said.

“We’re in Williamsburg, a market that's traditionally underserved with office, and one of the theses that we developed was that it was really an amenity for the neighborhood,” Zahler said. “Of the 22 tenants, 19 of them had principals that basically live within a 10-block walking radius.”

Diversifying assets and connecting neighborhoods has allowed developers to spread further into the borough and increase rents as the density of stores, restaurants, green space and other local amenities rises. 

In April, the average Brooklyn rent was $3,700, up from $2,600 a decade prior, according to a report by MNS Real Estate. 

“For the renters or the buyers, you're victims to the success of my co-panelists,” Ariel Property Advisors partner Sean Kelly said.