Developers have rushed into Brooklyn at a fierce pace over the last several years, resulting in a surge in condo and rental inventory, which now has some developers worried. With another wave of new residential projects expected to hit the market over the next three years, real estate industry professionals have to had to think of innovative ways to generate sales, including strategic incentives aimed at purchasers and the brokerage community.
The current rate of development and recent slump in sales have sparked concern over how new inventory slated to debut in 2019 and 2020 will be absorbed.
Dennis Sughrue, a partner in Pryor Cashman's Real Estate Group who frequently advises developers, spoke to The Real Deal about how this influx of new residential units is affecting Brooklyn developers.
"Developers can sometimes make it work if they find more creative ways to structure deals," he said. "They can, for example, find ways to let the original landowner partake in the upside of the project or include a retail or residential unit in the transaction. The approach, in essence, is: 'How do you bring an original owner in as more of a sort of partner?'"
Still, Sughrue acknowledged that this isn't always feasible, and market softening has proven painful for some firms that invested in pricey sites. "You do have developers who bought land at high costs and are now looking at maybe adjusting projections," he noted. "It's an unpleasant exercise."
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More on Sughrue's Practice
Recognized as a leading real estate attorney by New York City developers, Dennis Sughrue is experienced in the complex arrangements required to assemble, capitalize and finance major development deals. When important transactions are on the line, hotel, retail and office property developers throughout the city turn to him for counsel.
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