Brooklyn developers favor smaller residential projects as costs climb

Brooklyn's residential developers are shifting away from scale and toward renovated townhouses, converted two-family homes and boutique condominium buildings, according to a Commercial Observer analysis published Oct. 8.

The column attributes the change to higher interest rates, elevated construction costs and longer approval timelines.

Demand for well-designed housing in Brooklyn remains strong, the column says; what changed is the mindset of developers rather than buyer appetite.

The prior decade was defined by rapid growth, rising property values and bigger risks, with inexpensive financing and developers confident that demand would absorb new inventory.

Developers now optimize a given footprint rather than trying to maximize every square foot, the column says.

Acquisition costs and realistic resale values get closer attention, and the operative question has moved from what can be built to what today's buyers will actually pay.

The column's illustration is a 2,500-square-foot home whose layout does not function; size alone, it argues, no longer reads to buyers as quality.

Successful projects now prioritize flow.

Smaller projects require less capital and can usually be completed faster, the column says.

The column frames inexpensive financing as a feature of the earlier market and higher rates as part of the shift; a shorter construction timeline shortens the stretch in which a project carries that cost.

The column is one practitioner's view of the borough's projects rather than a measured survey.