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Real estate developers engaged in 'arms race' to fill Brooklyn luxury apartments

The Ashland in Brooklyn NY
Gotham Market at The Ashland
The Ashland in Brooklyn NY

In New York City — one of the hottest real estate markets in the world — the battle for tenants has escalated into an all-out brawl of sorts among luxury properties.

As it happens, the weapons of choice have grown beyond the standard fare of marble countertops, sweeping views and porcelain bathrooms with expensive fixtures.

An "arms race" is breaking out in Brooklyn to draw renters to the neighborhood's hip and expensive rental market, which is becoming increasingly saturated amid a construction boom of high-end apartment buildings. The soaring supply has done little to curb prices: Recent data from real estate firm Douglas Elliman shows the average rental cost in Brooklyn is well above $3,000 per month.

According to a report by Curbed, at least a dozen new high-end apartment buildings have hit the Brooklyn market in 2016, with more on the way. So how will these buildings compete to get the attention of potential occupants, who will be expected to fork over thousands per month in rent?

Enter real estate developers like the Gotham Organization, which has been bringing special events to residents for several years, including rooftop concerts with the likes of Lady Gaga at The Atlas, one of its properties in Manhattan. That tradition continues at Gotham West, a building that opened in 2013.

Gotham is now looking to do the same in Brooklyn, the organization's president, David Picket, told CNBC in a recent interview. Staying on the cutting edge of the luxury building market, which rents units for a median price well above average — around $6,000 — "is sort of like an arms race," Picket said.


Gotham Market at The Ashland
Gotham Market at The Ashland
Gotham Market at The Ashland

Gotham has all its guns blazing as it tries to tailor-make a neighborhood within an apartment building. The focus of Gotham's Ashland building in Fort Greene centers around eating as entertainment.

In a space it calls the Gotham Market at The Ashland, tenants can order food from a variety of vendors in the building or around the neighborhood and spend time eating together in a communal space, possibly enjoying a wine tasting, or a chef's specialty at the pop-up stall inside the market.

"There's nothing quite as communal as breaking bread and sharing a meal," Picket said, explaining that was the focal point of the amenities package at The Ashland. He told CNBC that event programming for the building runs in the hundreds of thousands of dollars a year.

"It's the way we bring our tenants together because we feel that community in our buildings is important," Picket added.

From there, it's bottoms-up luxury with a bar area on a "several thousand square foot rooftop that's been landscaped and hardscaped for people to go lie out, bring some friends up and have a drink," Picket said. On that rooftop, concerts and movie screenings are held, with expansive views of the city's skyline.

The building also includes a gym with separate rooms for weightlifting, cardio and movement workouts such as yoga — with an array of classes offered twice a day by a fitness company hired by Gotham just for The Ashland.



Source: Lightstone Group, Inc.
"We'll have parties and famous DJs will come in and perform. We'll do scotch tastings and beer tastings. We'll do pinot [wine] and pooches and we'll have different dog events, things for pets. Every day is really an interesting activity." -Scott Avram, senior vice president of development at the Lightstone Group

The Ashland is far from the only game in town. Among the big players in Brooklyn's booming luxury apartment market is 365 Bond Street, close to Carroll Gardens, another trendy neighborhood.

Located in the Gowanus area — notorious for its smelly canal and gritty industrial buildings — the building is part of a now bustling neighborhood that features a Whole Foods, trendy eateries and hip bars.

365 Bond Street "actually feels like a really unique boutique hotel, and feels quaint even though it offers all the amenities," said Scott Avram, a senior vice president of development at the Lightstone Group, which oversees the development of the 700 units at 365 Bond Street and recently got clearance to construct a $75 million property in Queens.

The size of a full city block, 365 Bond is located at the end of a cul-de-sac surrounded by trees and parks, and is just minutes away from lower Manhattan, accessible by public transportation.

Source: Lightstone Group, Inc.

Yet despite the amazing neighborhood, the in-house experience created for tenants by Lightstone is enough to keep them at home. As one might expect, the price of admission doesn't come cheap: A one-bedroom unit at 365 Bond costs at least $3,000 per month, while two bedrooms can run well above $6,600.

Bragging rights include 40,000 square feet of amenity space with a landscaped rooftop with cabanas, barbecue pits and a bar area with a sweeping view of the Manhattan skyline. Like the Gotham Organization, Lightstone spends a hefty six-figure budget on events, managed by 365 Bond's very own lifestyle director.

If the events at the building aren't enough, there is calendar full or activities tailored to the desires of the tenants, and the lifestyle director will even organize catering for private parties at a resident's bidding. A library with a fireplace and a playroom for children help round out the building's impressive list of creature comforts.

"We'll have parties and famous DJs will come in and perform. We'll do scotch tastings and beer tastings. We'll do pinot [wine] and pooches and we'll have different dog events, things for pets. Every day is really an interesting activity," Avram told CNBC.

Correction: Gotham West opened in 2013. An earlier version misstated the length of time the building had been open.