This new 14-unit building at 320 Bedford Ave. was designed as a condominium, but became a rental after the developer encountered construction and financing challenges. (PHOTO: TRICIA SUMMERS)

Reported on June 27, 2009

Real estate brokerage firms expect inventory numbers in Williamsburg to spike as a result of the national economic downturn. In the aftermath of the financial downturn felt by developers across New York City, Williamsburg is confronting overdevelopment, under-financing, and nervous buyers.

“It’s thousands and thousands of apartments that are being built here, and there is an inventory issue,” said David Maundrell, president of AptsandLofts.com.

Strolling around Williamsburg since the early to mid-2000s, visitors could see a plethora of boutique condo projects dotting the horizon in the midst of decades-old factory spaces and warehouses. A cacophony of construction echoed across a one-mile radius of Bedford Avenue until late 2008, luring prospective buyers with luxury amenities and a buzz-worthy locale.

The New York City Council passed rezoning measures in the formerly crime-ridden industrial neighborhood in 2005 and residential development skyrocketed, bolstered by seemingly endless demand from newer, wealthier residents. But by fall 2008, real estate development took a hit—and Williamsburg, due to its volume of projects, felt the effect.

“There’s been about a 20 percent price drop in asking prices,” said Christine Blackburn, senior vice president at brokerage company Prudential Douglas Elliman. According to Blackburn, one-bedroom apartments, in the peak of the market in about 2007, averaged around $550,000 to 600,000 with average sizes ranging from 700 to 800 square feet.

Brokers attribute price decline to basic supply and demand principles.

“Most of our buyers were not subprime borrowers: they were, you know, 10 percent down at least,” Maundrell said. “However, we do have an issue of being overbuilt, and that’s what’s bringing down prices at this point, with the combination of financing.”

Many for-sale condominiums are flipping to rentals to accommodate steadier demand.

“Ultimately, they’re going to make a business decision about how to get out of their projects,” said Doug Bowen, vice president of Core Group Marketing, a New York-based brokerage and marketing firm. “And usually that means two things: lowering prices is the main thing, and/or going rental.”

Prospective renters have noticed the increase in availability, but for many, prices haven’t dropped enough.

“I would love to have a one-bedroom or a studio, but those are unfortunately out of my price range,” said Thea Williamson, 26, a program manager at a non profit organization who hoped to capitalize on the inventory. “I used the craigslist method primarily, and I also contacted several Brooklyn-based realty companies.”

After living in Williamsburg for two years, Jonny Hamilton, 30, is considering moving to another apartment in the neighborhood due to increased inventory.

“There is no way I am going to live in Williamsburg for $1,500 or more per month for a one-bedroom,” Hamilton said. “It sucks to be out here and not able to buy a place with how much I am spending in rent, but I just don’t have the money for a down payment.”

Paul Tepper, 29, a part-time web developer and graduate student, has encountered some recent bargaining opportunities with some landlords.

“We’ve talked to people who’ve been like, ‘Yeah, might be able to get it to come down by $100, $200,’” Tepper said, “and we’ve talked to people where it’s not the case. It depends on how expensive it is.”

Michael Falsetta, executive vice president at appraisal firm Miller Samuel Inc., doesn’t see Williamsburg as a particularly unique case in New York City.

“Obviously, Williamsburg is going to mirror the trends of the wider New York City market, period,” Falsetta said. But despite the economic shift, there is enormous demand to live in the neighborhood.

“It’s not a heavily rent-stabilized market,” Falsetta said. “In the case of Williamsburg, it’s that simple.”