Manhattan has long been the most expensive borough for renters, with Brooklyn often seen as the consolation prize for those priced out. However, Brooklyn rents have climbed steadily over the past decade as more and more people have been drawn to the borough's eclectic scene. And now that Netflix (NASDAQ: NFLX) has put down roots in Bushwick, those rents are set to hit new heights.
The gap in median rents for Manhattan and Brooklyn has narrowed greatly over the years. Back in February 2008, Manhattan's median rents were at $3250, and Brooklyn's were $2200 -- a difference of more than $1000 -- according to a Miller Samuel/Douglas Elliman report.
Cut to Nov. 2020, and there was a difference of just $171 between median rents in Manhattan ($2957) and Brooklyn ($2786). Of course, people fleeing the city during the pandemic had lowered the rents. In March 2020, rents in Manhattan were at $3590, while Brooklyn was at $3000.
But the demand for rentals in New York is once again on the rise, especially in Brooklyn. In September of this year, Brooklyn saw its highest number of leases signed for the same month since 2008 when the reporting began, and it marked a 4.5% increase from this time last year.
A hip haven for artists
Netflix has been filming all over the five boroughs for years now, but this is the first time the production company has a permanent place in New York City. The spot in question is a 170,000 square foot space in the Bushwick section of Brooklyn, right off the L line. The enormous state-of-the-art facility spans nearly two avenues and comprises six soundstages, a mill, and plenty of office space.
Michael L. Arkin, an agent for Warburg Realty in New York, says that Netflix's studio puts it in the "heart of the industrial zone" in Bushwick. The production work will attract a large group of highly skilled and well-paid professionals who will need, aside from housing, a wide range of services and equipment.
"Artists are always the leading edge of neighborhood development and gentrification. The process is well underway in Bushwick already," says Arkin.
For the past two decades, Bushwick has attracted artists looking for studios and workspaces after being priced out of Manhattan and other parts of the city. "Some of the artists and artisans who will be working at the Netflix complex will like the neighborhood's mixture of funk and hip eateries, plus some will also like the idea of walking to work," Arkin says.
John Walkup, co-founder of UrbanDigs, a residential real estate data analytics firm, agrees. "A new Netflix studio is likely bullish for Bushwick, as well as surrounding areas like Bed-Stuy and East Williamsburg because it anchors jobs to homes," says Walkup.
Residential areas like Prospect Heights and Manhattan's Upper East and West Sides were among the first markets to recover post-COVID "as buyers sought to put the 'home' into work from home," Walkup notes. As people go back to the office, many would certainly like to forgo a lengthy commute, so living within walking distance or a short subway ride is a big perk for both buyers and renters.
The Millionacres bottom line
Times have certainly changed in the big city. Brooklyn's eclectic neighborhoods and vibrant scene make it a first-choice destination for many renters -- and it's certainly not the cheaper alternative to Manhattan that it once was. The opening of Netflix's studio in Brooklyn is just one more way the production company is disrupting the Hollywood juggernaut, and it's something that residential and commercial real estate investors can applaud.