Brooklyn Condo Rewrites NYC Luxury Pricing

OK, kids. Get out your pencils and show your work: When something new in a former industrial area costs less than half of something old in a classic neighborhood, will lots of people buy it?

The Pencil Factory, so named because it used to be a pencil factory, consists of 93 one-bedroom (starting at $372,000) and two-bedroom apartments (starting at $535,000) a couple of short blocks from the Brooklyn, N.Y., waterfront. It covers three lots, attaching a new brick-clad structure to a landmark site where the pencils once flowed. And it may be the cheapest deal in New York City for a buyer who wants to live the lush life (and doesn't mind the rumble of passing trucks).

On Wednesday, according to broker Hans Schenck of Prudential Douglas Elliman, nearly four dozen folks from New York's brokerage community partied on the Pencil Factory rooftop. What made them so giddy?

Nothing less, it seems, than the return of luxury new construction to Gotham's anxious market.