How Policy and Vision Created 3 Million Square Feet of Commercial and Residential Space in DUMBO

Brooklyn’s renaissance didn’t happen by accident. A critical seed was planted by David Walentas when his firm, Two Trees, purchased a cluster of aging warehouses in DUMBO in the 1970s. After the area was rezoned, the firm successfully repurposed its portfolio into more than 3 million square feet of commercial and residential space across 12 buildings to create a thriving 24-7 community with access to an 85-acre riverfront park.

At a recent panel discussion presented by Ariel Property Advisors and Cozen O’Connor, Alyssa Zahler, Managing Director at Two Trees, described how her firm applied its DUMBO redevelopment strategy to Williamsburg, which was rezoned in 2005. Two Trees acquired the 19th Century Domino Sugar Factory site in 2012 and has transformed it into The Refinery—460,000 RSF of offices, retail, and open space. A larger mixed‑use waterfront campus featuring office, retail, rentals and condos has been completed or is under construction across five additional contiguous sites.

Today, Two Trees’ office tenants in Brooklyn are largely tech and creative companies, with 40% of new leases in the Williamsburg portfolio in the AI or an AI-adjacent space. Two Trees’ vertically integrated model keeps construction and management in‑house, enabling high-quality pre‑built spaces that still lease in the mid $40s per square foot in DUMBO and pre-built spaces in Williamsburg that lease for $65-$78 per square foot.

A decade ago, Zahler said she had to “sell Brooklyn” by highlighting transit and lifestyle benefits. Not anymore. “People want to be here,” she said. “People want to live here.” Approximately 80% of the decision makers that lease space in Two Trees’ office properties in DUMBO and Williamsburg already live nearby.

A Brooklyn Market That’s Surging

Brooklyn’s fundamentals reflect the demand for housing. Median market rate rents in October rose 6.9% year‑over‑year to $3,850, and the Q3 2025 median sales price reached $1.05 million—a 7.7% jump from the prior year, according to reports prepared by Miller Samuel Real Estate Appraisers & Consultants for Douglas Elliman.

Investment sales have followed that trend. Through Q3 2025, Brooklyn saw $4.92 billion in transactions across 706 deals, Ariel Property Advisors’ research shows. Multifamily sales jumped 22% to $2.8 billion in Q1-Q3 2025 compared to the same period last year.

Development site sales were up 10% year-over-year, rising to $1.14 billion in the first nine months of 2025. The momentum in the development sector is the result of a political shift, said Ariel Partner Sean Kelly, Esq. “Ten to 12 years ago, NIMBY was everything and the politicians were on board with that,” he said. “In the last five or six years, we’ve seen a big swing. Now everybody’s pro‑development.”

Kenneth Fisher, Esq., Member Cozen O’Connor, credited the Gowanus rezoning and a broader recognition among policymakers that the only way to address the housing crisis is to build.

Rybak Development: Building for the Middle Market

Sergey Rybak, Principal and Founder of Rybak Development, has been a beneficiary of Brooklyn’s development boom, overseeing the completion or development of over 1,600 residential units citywide, of which over 1,100 are in South Brooklyn, Gowanus and Williamsburg. His vertically integrated firm includes development, construction, management, and curated retail spaces that serve as amenities for building residents.

The New York City Economic Development Corporation recently awarded Rybak Development a contract to build a 800,000‑square‑foot, all‑electric mixed‑use project in Coney Island with 505 apartments—383 market-rate and 122 affordable—plus amenities, retail, parking, and community space. He estimates the project will employ 300 people a day for at least two years.

Rybak focuses on middle‑income renters and credits his success to efficiency. “We do our own construction, we do our own management, we do our own development,” he said.

Although he is building rentals, he believes policymakers should also encourage homeownership to help working families build wealth—an opportunity that diminished after the expiration of the 421a tax abatement for condo development.

Betting Big on Brooklyn Heights

Ian Ross, Founder and Managing Principal of SomeraRoad, an opportunistic real estate investment and development firm headquartered between New York City and Nashville, has bet big on Brooklyn’s luxury condo market. In May 2025, his firm acquired the historic Hotel Bossert at the corner of Montague and Hicks streets in Brooklyn Heights, signaling long-awaited new life for a building that had sat vacant for more than a decade.

“I spent the last 10 years walking by the Hotel Bossert and staring up at what is hands down the most important and iconic building in this neighborhood and arguably one of the most important buildings in the borough,” Ross said.

Ross said his firm is restoring and revitalizing the 116-year-old, 14-story Italian Renaissance Revival-style landmark into luxury branded condos with world-class amenities and service.

Once known as the Waldorf-Astoria of Brooklyn, the Hotel Bossert famously hosted the Brooklyn Dodgers’ 1955 World Series celebration as well as countless other events over the years. In 1983 it was sold to the Jehovah’s Witnesses. It later passed to investors whose development plans stalled, and the property was ultimately sold at auction.

Ross is bullish on New York City’s long‑term strength. “The talent, the culture, the demand—it’s unmatched.”

A Tale of Two Markets: Free Market Thrives, Regulated Stock Struggles

While free‑market development is booming, rent stabilized housing is in crisis. Since HSTPA’s passage in 2019, stabilized buildings have traded at 50% discounts on average, with recent sales discounted by an average of 65%, and 14% are in pre‑foreclosure or foreclosure, according to Leon Goldenberg, CEO of Goldmont Realty.

A New York Apartment Association study found that roughly half of pre‑1974 stabilized buildings would face bankruptcy if rents are frozen for four years under Mayor‑elect Mamdani’s proposal. About 47% of the city’s nearly 1 million stabilized apartments sit in buildings that are 100% or nearly 100% stabilized. An estimated 5,000 buildings with more than 200,000 units are already in severe distress, with the majority in the Bronx and Northern Manhattan.

Operating costs have surged with utilities up 31%, maintenance up 39%, and insurance up 150%, according to an NYU Furman Center analysis of Rent Guidelines Board data. Goldenberg noted that in the last 10 years, his insurance has risen from $500 to $1,550 a unit.

Meanwhile, regulated rents remain too low to fund essential repairs. Goldenberg said the average rent on his apartments is $1,386 for which he pays all expenses, including taxes, water and sewer, insurance and sometimes a mortgage, which have increased faster than inflation.

He shared an example of two stabilized units in Bushwick that are sitting empty because their rents of $577 and $612 are too low to justify the renovations necessary to re-rent them and incur additional expenses of $115 for water and $75 for repairs.

NYCHA public housing, by contrast, collects roughly $2,000 per unit (with tenants paying around $500–$590) while paying no taxes, water, sewer, insurance or mortgage—yet still faces a $78 billion capital shortfall and cannot keep up with repairs, Goldenberg said.

Goldenberg argues for solutions, specifically implementing a new tax class for buildings with 75%+ stabilized units, overhauling the J-51 tax incentive program to better support capital improvements and reducing insurance costs.

He also said Housing Court needs to become more efficient because collections have dropped from 96% to 90% since COVID and are still falling. Evictions now take a minimum of 15-18 months with most of them taking two years. Legal fees now exceed 10% in situations where the City pays the arrears to keep the tenant in place, due to the recurring need for court appearances.

The Bottom Line

Yet for all this activity, the question remains—is it enough

Brooklyn’s free‑market boom is real—driven by policy support, private vision and overwhelming tenant demand. But the regulated side of the market is unraveling. More than 200,000 stabilized apartments are financially distressed, creating a widening divide between growth corridors and rent‑regulated stock.

For now, Brooklyn’s story is a tale of two markets: one thriving on flexibility and investment, the other constrained by regulation and rising costs

Content from this article was taken from the State of the Brooklyn Real Estate Market: What’s Ahead? networking breakfast and panel presented by Ariel Property Advisors and Cozen O’Connor on November 13, 2025 at the Brooklyn Public Library’s Center for Brooklyn History. To view a video of the panel discussion, please click here.

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