April 22, 2026
Manhattan gets most of the press. It always has. But if you are an investor or a property owner paying attention to actual return data coming out of 2025, the outer boroughs are telling a more compelling story on a risk-adjusted basis and have been for several years running.
Here is what the numbers show.
The Transaction Volume Story
Brooklyn's commercial real estate market recorded 1,191 total deals in 2025, generating $6.6 billion in transaction volume according to TerraCRG's year-end report covered by Crain's New York Business. North-Central Brooklyn, which includes Bushwick, Bed-Stuy, and Crown Heights, led the entire borough by number of transactions at 259 deals for the year. That level of activity reflects sustained investor demand that has been building for over a decade, not a speculative spike.
Queens, meanwhile, showed the strongest inventory growth of any NYC borough in mid-2025 at 14.9% year over year per Block Appraisals, while also recording some of the highest price appreciation for 2-4 family mixed-use assets in the metro area. The median sale price for Queens multifamily properties reached $1,155,500 in 2025, a 7% year-over-year gain.
The Price Entry Point Matters More Than People Admit
The core math on risk-adjusted returns comes down to entry price. A mixed-use building in Bushwick or Jamaica that you buy for $1.2 million is a fundamentally different risk profile than a comparable asset in a Manhattan neighborhood trading at $4 to $6 million, even if the income looks similar on paper.
With a lower acquisition price, you have more cushion on a down market scenario. Your debt service is lower in absolute terms. Your vacancy exposure is smaller as a percentage of total investment. And in the outer boroughs, your buyer pool on exit is broader because more investors and owner-users can qualify to buy at that price point.
MLS Campus's 2025 NYC investment analysis found that multi-family and mixed-use properties in the Bronx and Brooklyn have historically delivered 5 to 8% annual appreciation with low vacancy rates, which is competitive with or superior to many Manhattan assets on a cash-on-cash basis once you account for the difference in entry price.
The Rezoning Dividend Is Real in the Outer Boroughs
Over the last two years, the major rezoning activity in New York City has been concentrated almost entirely outside of Manhattan. The Atlantic Avenue Mixed-Use Plan, the Gowanus rezoning covering 82 blocks, the OneLIC plan approving 14,000 new residential units in Long Island City, and the City of Yes zoning reforms all have their most significant impacts in Brooklyn and Queens. When the city commits hundreds of millions in public investment to a corridor and changes the zoning to enable denser mixed-use development, adjacent property owners capture that value in their buildings whether they develop or not.
Manhattan already has the infrastructure. The outer boroughs are still in the middle of a multi-decade upgrade cycle, and the owners who bought ahead of that infrastructure investment have seen the strongest returns.
The Free Market Premium and What It Means for Outer Borough Owners
The single most important valuation dynamic in Brooklyn and Queens mixed-use real estate right now is the separation between free market and rent-stabilized assets. Matthews' Brooklyn H1 2025 report documented that free market mixed-use buildings are trading at nearly double the price per square foot compared to regulated buildings of comparable size. If you own a free market or partially free market mixed-use building in an outer borough, that premium is working in your favor today in a way that has not been true to this degree in the past.
The buyers competing for clean, free-market outer borough mixed-use assets in 2026 include owner-users, small investors, and developers all bidding against each other. That competitive dynamic is compressing cap rates and pushing prices up on the specific inventory they want most. Manhattan does not have that same cross-sector buyer competition at the property sizes most individual owners are dealing with.
The Bottom Line
Risk-adjusted returns are about what you make relative to what you could lose. Outer borough mixed-use properties in Queens and Brooklyn give investors lower acquisition costs, durable rental demand, structural supply constraints, active rezoning tailwinds, and a deep buyer pool on exit. Manhattan gives you prestige and liquidity at a premium that is difficult to justify on the numbers alone for most investors operating below the institutional threshold.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
