WHITE PLAINS—Long considered one of the main suburbs of New York City, Westchester County and the myriad towns and municipalities within it are making a concerted effort to make room for more multifamily product. And as in many areas of the country, shifting demographics—specifically, Millennials—have changed the way planners must look at housing and community-making.
These changes are also making the County one of the best places to invest when it comes to multifamily housing. Those were among the biggest takeaways from the multifamily expert panel at RealShare Westchester County, which took place at the Crowne Plaza here late last week.
As the largest generation in US history with a population of 80 million, “the Millennials have certainly changed the landscape of the real estate industry in Westchester County, and the way we live,” as Grant Jaber put it. “The perfect world for them isn’t suburbs with a lawn.”
Rather, they prefer a decent apartment within walking distance of work and entertainment. As such, “This is shaping the way we do business in CBDs as well as suburbs,” said Jaber, who is senior development director for AvalonBay Communities Inc. “The municipalities need to attract that demographic, because they’re losing them to places like Stamford, CT and New Jersey. They’re losing that business, and that business is important for the future of Westchester.”
Glen Vetromile, principal of the Glenco Group Inc., pointed out that there’s a growing discussion in Fairfield County, CT, as well as Westchester County, around bringing more housing to the area and revitalizing downtowns in an effort to create more livable communities. “Planning committees are talking with municipalities about creating more dense multifamily, which is a tax benefit,” he noted. “The towns along the Metro North train lines are starting to create transit-oriented development plans, and it should be a benefit as well.”
As an example, LCOR senior vice president James Driscoll pointed out that Bank Street Commons—a major transit-oriented project developed by LCOR years ago adjacent to the Metro-North Station in this city’s downtown—has been phenomenally successful. The $140-million project is considered a catalyst for Downtown White Plains’ vibrant success. LCOR recently went back to the Planning Board with a proposed follow-up project of two 16-story apartment project with 561 rental units (449 at market rate and 112 affordable), parking for 570 cars and approximately 6,345 square feet of retail space at ground level.
“Millennials want a very specific community—walkable, or accessible by train, a 24/7 lifestyle,” said Driscoll. “Very few Millennials are driving cars. To ensure we have a vibrant opportunity for Millennials here, we need to have great residential opportunities in communities like White Plains that are quick trips into Manhattan. Yet we also need attractive office space and vibrant communities up here to attract companies and workers.”
Solomon Group‘s managing director, Zach Solomon, indicated that his firm hasn’t had a hard time keeping its product full: “Pricing, service and space are the most important factors to us—as long as we give tenants those things, we’ll be able to keep our communities occupied.”
The demand for quality multifamily housing is working in investors’ favor, according to those sharing their views on the panel. HFF senior managing director Jose Cruz noted that buyer pools are attracted to Westchester properties because of the rent premium and upside potential. And the capital sources chasing property in the county has diversified to include not only local players but national and foreign investors as well.
Solomon, too, finds the rent premium attractive. Westchester, he noted, was a natural progression for the company since it had bought product in the surrounding areas. The rent premiums were an added plus. “Paybacks on our investments in terms of rent gains are paid back in half the time as our investments in other markets,” he said. “The value-add here is definitely the rent premium.”
Added Cruz, “The vacancy in Westchester is about 3.7% for about 39,000 apartments,” said Cruz. “The rents here—and their potential growth—are very attractive to investors. Construction deliveries are very low, since it’s a lot of work to get your project approved here. With the high barriers to entry, the rent growth, proximity to the city and the great transportation network, it’s a great place.”
The rest of the speakers—including moderator Harry Delaney, a senior associate with Marcus & Millichap—agreed that the barriers to entry in most submarkets in the county are very prohibitive to new development. NIMBYism is a major factor. “
The difficulty alone of finding a site that’s zoned, is large enough to do multifamily, that has the necessary services and is close to transportation greatly reduces your options,” said Vetromile. “And then you can go into a town and want to build something, but there may be a school board that doesn’t want to increase the population.”