In 2013, piano manufacturer Steinway & Sons finalised the sale of Steinway Hall, its Manhattan showroom, to a real-estate joint venture. Steinway will now have to look for a new home for its flagship showroom when it moves out of the venerable hall, which first opened in 1925, and which is now destined to have a new 16-storey tower built on top of it, as part of the new owner's plans to integrate it into midtown Manhattan's so-called 'billionaires belt'.
Steinway is not the only company to be driven out of Manhattan by cost. But this growing trend has been a boon across the East River in Brooklyn, where foreign investment has helped transform the area and make it a key economic centre in New York.
“Ten years ago we began to rezone Brooklyn, which started the first wave of construction,” says Tucker Reed, president of the Downtown Brooklyn Partnership, a non-profit organisation of public-private partnerships. “In 2007, it was the beginning of the end of the world, with no investment for several years.”
A second wave of construction has taken place this decade, with what Mr Reed describes as “the build out of 1.5 square kilometres of office space, residential properties and new hotels". And it is not just office and residential space that is attracting people to Brooklyn; the borough also hosts 11 colleges and universities.
Tax and real estate improvement programmes are helping to attract investment to Brooklyn, as well as energy initiatives, but on top of these factors, the New York City EB-5 Programme is also notching up a series of successes.
Set up as an incentive for foreign investors that want residency in the US, the programme grants a permanent residency visa to investors – as well as their spouses and children – in exchange for "foreign investor capital [being] invested into job-creating activities". An investment of $500,000, creating 10 jobs, is the minimum threshold for the programme.
“The long-term success of the programme is measured years later by the impact of a project on its neighbourhood [and] the jobs it created, tracked by the census,” says Mr Reed. “It is a programme designated for high unemployment zones.”
The scheme has helped revitalise Brooklyn Navy Yard, a former shipyard that has been transformed into a thriving industrial park, as well as paving the way for the mixed-use commercial and residential development project, Atlantic Yards, another made-in-Brooklyn success story.
Melissa Román Burch, the executive vice-president and director of commercial and residential development at real estate developer Forest City Ratner, says: “The Barclays Centre [home to basketball team, Brooklyn Nets] and Atlantic Yards are located at the nexus of mass transit, cultural venues, retail centres and the best residential neighbourhoods in the city. Similar to Manhattan, Brooklyn has emerged as a magnet for international investment. Mikhail Prokhorov and the Onexim Group are majority owners of the Brooklyn Nets and partners in the arena. The Shanghai-based Greenland Group [a Chinese state-owned developer] and Forest City Ratner have completed a definitive agreement for a joint venture to develop Atlantic Yards.
“The residential market in Brooklyn is ripe for new development and our partnership with Greenland will hopefully enable us to accelerate the residential rollout of Atlantic Yards… We are well under construction on B2, the first residential tower, and expect to open the building for residential occupancy in December 2014. It will be the tallest modular building in the world and 50% of the units are affordable housing,” says Ms Burch, who is head of the B2 project.
As well as being the first residential building in Atlantic Yards, Ms Burch also believes that the 32-storey B2 block represents a big step forward for the modular building concept – prefabricated buildings comprising multiple sections, or modules, that are connected on site. "We think this is going to launch a new industry in New York," she says of the modular system.
The modular system is not the only thing she is optimistic about. “Brooklyn is hot now, and I have no reason to believe that will change in the near future," she says. "With the expected population growth, the demand for housing, particularly in the area surrounding Atlantic Yards and Barclays Centre, will continue to rise.”