After a strong 2024, it looked like this would be a good year for Brooklyn investment sales.
The market seemed to be stabilizing after the state passed 485x and the City Council adopted the expansive zoning text amendment City of Yes for Housing Opportunity. The presidential election was in the rearview mirror and the Federal Reserve had finally started to cut interest rates.
“This was when the party was supposed to start. We were supposed to be closing deals every single day,” said Dan Marks, CEO of TerraCRG. “Obviously, I don’t think people had in their bag of cards the craziness that was going to happen.”
While Brooklyn logged a relatively stable first quarter, Marks said uncertainty about tariffs, the stock market, interest rates, a recession and inflation are now casting a shadow over deals.
“All these things are still looming overhead,” he said. “Major, major question marks.”
The Brooklyn investment sales market recorded a total volume of $1.2 billion in the first quarter, according to TerraCRG. That’s a 25 percent increase in dollar volume year-over-year, but a 61 percent drop from the previous quarter.
Retail and industrial transactions suffered big losses. Retail deals reeled in $38 million in the first quarter, down 52 percent year-over-year and 83 percent from the previous quarter. The industrial sector grabbed $127 million in total sales, down 32 percent year-over-year.
Mixed-use and new development fared better, increasing in both transaction and dollar volume. Sales topped $432 million, a 104 percent increase from a year ago, boosted by the $102 million said of the Pintchik portfolio to the Ostad family. Development deals clocked $173 million across 45 transactions, up 83 percent.
The top deal of the quarter was the $127.5 million sale of a Williamsburg rental building that UDR bought six years ago and sold to Urban Pacific Investors for a slight loss. But values remained strong overall. The average translation size increased 25 percent year-over-year, from $3.6 million to $4.5 million.
It’s too soon to tell what the long-term effects of the tariffs will be, or where President Donald Trump’s trade policies will land. Although deals are still happening, developers are starting to bake in higher prices to their hard costs as they underwrite deals, Marks said.
“When there is a level of uncertainty or unpredictability, the overall market tends to pause or slow down to see which way the wind is going to blow,” Marks said. “Hopefully, this will be something that we’ll have some clarity on soon, for better or for worse.”