2017 Economic Forecast
Local experts share their predictions for eight of our most important industry sectors.
The Westchster Bank and M&T Bank are among the financial institutions looking to expand in Westchester in 2017.
In Westchester’s highly competitive banking environment, many of the key players are on the move and looking for an edge in 2017.
M&T Bank, for instance, has been making waves following its acquisition of Hudson City Bank last year. Eight Hudson City branches in Westchester were converted in February 2016, adding to the six existing M&T branches in the county. The changes have fueled hiring by the bank on both the retail and commercial sides. “That’s a further sign that we feel pretty bullish about Westchester County,” says Regional President Frank Micalizzi, who’s based in Tarrytown.
Headquartered in White Plains, The Westchester Bank opened a new branch in Rye Brook in December 2016, at 800 Westchester Avenue, and is looking to open a seventh county branch in 2017. “We think there will be opportunities to build our business in Westchester,” says CEO/President John Tolomer. “We’ve been very fortunate to attract the most prestigious small and midsize businesses in Westchester.” But Tolomer knows his team will have to work hard to keep doing so. “It’s always a challenge
to continue to acquire those types of clients,” he says.
Meanwhile, Wells Fargo, which is based in San Francisco but has a strong presence in the county, will be investing heavily in technology to make banking more convenient. “While many customers enjoy visiting their local branches, people are also
turning to mobile devices to conduct their banking,” says Maria Ferreira, Wells Fargo’s Community Bank area president for Suburban New York and Connecticut. “Wells Fargo will
be investing in its technology, to deliver a world-class experience for customers, both in our Westchester County branches and online.”
As for the rest of the banking sector, optimism among business owners about President-elect Trump’s proposed corporate-tax cut — from 35 percent to 15 percent — bodes well for banks that serve them.
“There seems to be a lot of receptivity to a potential tax cut,” says Tolomer. “In my experience, every recovery starts with confidence and enthusiasm. We’re beginning to see the seeds of enthusiasm.”
The uptick in real estate prices in New York City in the past few years could also spark business for Westchester banks, as it drives homebuyers seeking less costly options toward the county. “Westchester is a nice alternative for folks to have a good quality of life and still be near New York City,” says Micalizzi. “Westchester is a very good county for us to do business in. We’re very optimistic.” — Elaine Pofeldt
This mixed-use project at Larkin Plaza (below) in Yonkers and new medical pavillion in White Plains are examples of commercial real estate strength.
Promising Year Ahead
White Plains is the hottest place in Westchester’s commercial real estate market for 2017, although Harrison, New Rochelle, and Yonkers show considerable progress, as well. Northern Westchester continues to be awash in vacant office space, while Mexican billionaire and new Westchester landlord Carlos Slim ponders the fate of the IBM and PepsiCo properties he bought in 2016.
“According to our analyses, the overall vacancy rate in office space at the end of the year was 21.2 percent, up 0.50 percent from 2015. The overall asking rent was $29.69 per square foot, which is down 0.40 percent from the year before,” reports Craig Ruoff, senior director at Cushman & Wakefield. “I do see a tightening this year, even though the stats don’t necessarily show that. There is about 240,000 square feet of deals pending. If they all go through, that could drop the vacancy rates a couple of points. In our day-to-day, I’m seeing rental numbers starting upward, too.”
Rick Rakow, principal of Rakow Realty, points out that new tenants in White Plains will take about 400,000 sq ft of space next year. “Between Sumitomo Bank, Dannon, and New York Life at 44 South Broadway, there is a tremendous amount of activity in White Plains,” he says. Sumitomo is a new tenant in Westchester, whereas New York Life sold their property in Mount Pleasant to Regeneron, so their move will reduce the amount of office inventory in the county.
White Plains last year proposed a long-term plan for downtown transit-oriented development, but it wasn’t the only city making progress in that regard. “When you look at what RXR is doing in New Rochelle [with the downtown-redevelopment master plan] and Yonkers [mixed-use project at Larkin Plaza], I see only good things,” Rakow says. “They are going to bring people into the residential units in a couple of years, and that will draw retail and other tenants.”
The market for retail space is not looking particularly strong for 2017, but even with the prospect of massive changes in the Affordable Care Act, there’s no pullback in the medical real estate market, according to Ruoff. “I’m working on more medical than I’ve ever had before, and I don’t really expect it to slow down. There’s enough potential growth in the industry and so many plans in place that we’ve not seen a backing off.” — Dave Donelson
Growth in technologies like telemedicine and genetic testing at Westchester Medical Center Health Network will continue to drive the county’s healthcare sector.
High Hopes, High Costs
Where is healthcare heading in 2017? The best answer comes from Gary Sastow, a partner with the White Plains-based law firm Brown, Gruttadaro, Gaujean, Prato & Sastow, PLLC: “If I could forecast that, I could translate that into an awful lot of money.”
Sastow, who specializes in healthcare law, speaks for just about everyone trying to predict what the Trump administration and a Republican Congress will actually do to the business of health and how that will affect hospitals, providers, insurers and… oh yeah, people who need care. When pressed, Sastow says he thinks the trend of independent medical practices joining hospitals or large medical groups will continue, as the costs of running a small practice are just too great these days.
On the care side, look for genetic testing to play an ever larger role. Westchester Medical Center Health Network, for instance, has teamed up with healthcare-technology giant Royal Philips to use its next-generation sequencing (NGS) system to provide a genetic overview of the patient, in order to precision-tailor individualized treatment. Quest Diagnostics, the New Jersey-based lab-testing company, also launched its IBM Watson Genomics service, which combines cognitive computing with genomic tumor sequencing, to help physicians identify and correlate genetic mutations in cancer tumors with treatments and clinical trials that may help that particular patient. “Advances in genetic sequencing and the use of data it provides will empower patients to access insights into their health so that they can engage in their healthcare decisions,” says Dr. Harvey Kaufman, senior medical director, medical affairs, for Quest Diagnostics.
Others offer more hope than conviction. Susan Van Meter, senior vice president of federal relations for the Health Care Association of New York State, hopes the feds push forward in improving interoperability — that is, developing a framework for disparate electronic-medical-record systems to work together more efficiently. Merin Joseph, EVP and CIO of WESTMED Practice Partners, hopes more investment in telehealth, and insurance company support for it, will allow this valuable tech-based service to gain traction.
But no one really knows the immediate future for healthcare, which leaves leaders like Gary Brudnicki, senior executive vice president of Westchester Medical Center Health Network, focusing on what they do best. “We are trying to do what’s right to care for our patients,” Brudnicki says. “In today’s competitive healthcare marketplace, if you do a good job on providing quality services, …you stand a chance of weathering the storms of how much you get paid for those services. If you keep volume high, chances are you’ll stay in business.” —David Levine
Facility enhancements and upgrades like a new interactive kid’s play area should help retail destinations like The Westchester compete with e-commerce sites.
Luring Shoppers With Tech
Happily for retail businesses, Westchester is the ultimate shopper’s paradise. The county boasts everything from small boutiques to outdoor shopping centers to high-end malls — all of which are working diligently to attract consumers.
Total 2016 retail sales in Westchester are projected to be better than average — approximately $1.5 billion, according to local retail expert Deborah Widger. Nationally, according to retail intelligence firm eMarketer, sales are expected to increase 3.5 percent, from $4.836 trillion in 2016 to $5.006 trillion in 2017.
As the average household income in Westchester is higher than both the national and state averages, the county should continue to fare well in the retail sector in 2017, Widger says. However, she says, to compete with online-shopping websites, retailers must create “exciting destination lifestyle venues” that focus on bringing consumers “out of the comfort of their homes.”
Existing retail will get a facelift this year, as county shop owners seek to provide a more engaging and technologically savvy consumer experience. In White Plains, The Westchester recently unveiled an interactive play area for children and their families and a contemporary technology lounge, featuring complimentary iPads for customer use. The mall now also offers on-call valet parking accessible through mobile devices, allowing shoppers to pre-request their cars by text message right before they leave the mall.
Cross County Shopping Center’s (left) management company, Macerich, recently partnered with global media firm POPSUGAR Inc. to blend its physical and digital shopping experience, in order to reach a wider audience. The collaboration will provide shoppers with custom, spot-on fashion advice and inspiration online that will, it is hoped, entice them to the Yonkers center’s brick-and-mortar shops.
Small boutiques, such as beehive designer collective in Mount Kisco and Current Home in Scarsdale, will also be incorporating technology and innovation into their 2017 strategies. Both stores will be adding e-commerce platforms to attract new customers and to keep up with big-box stores and the online retail juggernaut.
Also, expect retail development to expand in the northern reaches of the county, where land is more readily available and costs are lower. Take, for instance, the 130,000 sq ft Cortlandt Crossing project in the busy Route 6 corridor; and another large retail project being developed on Old Crompond Rd in Yorktown.
Widger suggests that retail, especially luxury, will thrive in 2017, so long as Westchester shop owners continue to focus on luring Amazon shoppers off their couches by creating convenient and entertaining shopping for the whole family that cannot be experienced through a computer screen. —Gina Valentino
(From top to bottom, left to right) A smaller pool of applicants has local schools like Pace University, Westchester Community College, Purchase College, Sarah Lawrence College, and Fordham University boosting financial aid and recruitment efforts.
A “Students’ Market”
The primary issue affecting all [higher-education] institutions here [in Westchester] is basically a demographic trend,” says Thomas Blum, vice president for administration at Sarah Lawrence College in Bronxville. “The number of college-age students in New York and surrounding states is flat or declining through the year 2025.” Colleges will be competing for a “largely static pool of candidates,” Blum adds, creating something of a “students’ market.” (Parents and high schoolers take note.)
To entice applicants, many schools are increasing recruitment efforts and financial assistance. According to Blum, Sarah Lawrence is targeting areas where relevant populations show growth, such as Texas and Florida. The college is also awarding aid to some 70 percent of its students, up from 50 percent 10 years ago.
Financial support is less an incentive and more a downright necessity, says Dennis Craig, vice president of enrollment management at Purchase College. A demographic shift increasing the number of “first-generation” college students has led to a higher level of need, he explains. Purchase is helping by “cutting costs, informing students of all federal- and state-aid opportunities and establishing a very effective fundraising arm,” Craig says, adding that assistance includes an “impact fund,” which provides resources donated to cover
These days, the process of “selling” higher education requires an emphasis on value. New areas of study, keenly targeted at emerging job markets, are all-important. Anthony Davidson, PhD, dean of the School of Professional and Continuing Studies at Fordham University, says economic growth within the county has led to “the creation of higher-skilled jobs.” Fordham’s “industry-specific” curriculum, “developed by professionals and infused with academic rigor,” is designed to prepare students for such employment, Davidson explains. Cybersecurity, emergency management, and digital marketing are trending disciplines, while healthcare and real estate also continue to grow, he adds.
Westchester Community College recently partnered with JPMorgan Chase and the New York City Labor Market Information Service to analyze employment trends in the Lower Hudson Valley. As a result, WCC will be updating its programs in health-information management, tech support, and hospitality, says the school’s president, Belinda Miles, EdD.
Sarah Lawrence is stressing skills “valued now by corporate America,” adds Blum. “CEOs tell us they want students who are critical thinkers, who can innovate and adapt in an economy that is all about innovation and adaptation.” —Gale Ritterhoff
Classic Westchester destinations like Untermyer Gardens inYonkers, plus our expanding hotel industry (below) keep county tourism numbers strong.
photo by Andre Baranowski
Westchester’s travel-and-tourism industry brought a record-high $1.8 billion into the county in 2015, up 3 percent from the previous year. When looking to the future, however, industry experts here will admit only to a cautious optimism, stressing instead efforts to keep numbers heading in the right direction.
One statistical needle that will be closely monitored involves the vitality of the hotel industry. Dan Conte, president of the Westchester Hotel Association, is expecting real economic growth in the hotel sector this year to be under 2 percent — somewhat lower than the 3 to 4 percent he’d like to see — citing concerns about the overall health of the economy. But the number of new Westchester hotels opening and in development, as well as existing hotels undergoing renovation, underscores a fair amount of confidence in the sector. New properties include a Dobbs Ferry Hilton Garden Inn, as well as Courtyard Marriott, Hyatt Place, and Hampton Inn and Suites locations, all in Yonkers, while the Mount Kisco Holiday Inn, the Hilton Westchester in White Plains, and the Westchester Marriott in Tarrytown are all undergoing renovations.
Natasha Caputo, director of Westchester County Tourism & Film, is addressing the worries, however, stressing that this increase in supply could skew hotel-occupancy numbers and stall per-room revenues. Her department is strategically promoting Westchester as a destination, which appears to be working. Research shows an uptick in Saturday-night stays, Caputo says, which is “a good indication that our leisure-marketing efforts are making headway.” About 70 percent of overnight stays have traditionally involved weekday business travel, she explains, adding that weekend stays suggest non-business getaways, including destination weddings.
Marketing efforts to boost visitation and spending in 2017 will include a more interactive website, a YouTube channel of promotional videos and an Instagram travel guide with numerous tappable links, all aiming to brand Westchester as a player in the “experience economy” now driving tourism, Caputo says. “We have a great tourism product,” she says, noting a vibrant arts scene, the farm-to-table culinary movement, destination shopping, new attractions (such as iFly indoor skydiving in Yonkers), waterways, seasonal events, beautiful open spaces, and more. “The biggest challenge is how to promote everything that makes Westchester shine,” Caputo says, “and that’s a good problem to have.” —GR
The WCA’s recently announced 1-gigabit Internet partnership (top) is energizing the tech community, while big local players like IBM continue to move forward.
Advances on the Horizon
With the need for speed and connectivity dominating virtually every business sector, Westchester’s technology community is determined to help local firms keep pace.
Ultra-speedy, 1-gigabit Internet may soon become a reality in Mount Vernon, New Rochelle, White Plains, and Yonkers, which collectively have about 500,000 residents, as the Westchester County Association (WCA) moves forward on a public-private partnership initiative to bring lightning-fast broadband to the region. It plans to seek consultants
for the estimated $750 million project and prepares to announce a steering committee in early 2017.
Initially, the plan is to roll out the service to key venues, such as businesses, community centers, schools, and colleges, then to branch out to residents, says Joan McDonald, a strategic advisor to the WCA, which is working on the initiative with all four cities. “As it gets up and running, we hope other municipalities in the county join in,” she adds.
Meanwhile, locally headquartered tech corporations — such as IBM, which is home to Watson, a technology that thinks like people do; MasterCard, a hive of fintech innovation; and communications powerhouse Broadview Networks — continue to move forward with advanced technologies. Broadview Networks, for instance, keeps improving its signature product — a virtual, cloud-based phone system called OfficeSuite UC. “We
are addressing an evolving workforce focused on business continuity and security,” says CEO Mike Robinson.
Continuing to thrive is the county’s biotech industry, which includes players like Regeneron — which is planning a one-million sq ft research-and-development campus in Greenburgh — and Acorda Therapeutics. The growth should pick up steam in 2017, with Governor Andrew Cuomo launching a new $650 million initiative to spur the sector in New York State by creating a world-class research cluster. This past fall, the lease for the Westchester BioScience & Technology Center — a $1.2 billion biotech-and-medical-office complex on the currently vacant “North 60” site in Valhalla that will also include retail development and a hotel — received the approval of economic consultants hired to review it.
Against this backdrop, the local startup community is percolating. The Westchester Tech Meetup, founded in 2013, now includes 639 members. “We need corporate innovation teams to stay in Westchester,” says Dan Potocki, cofounder of the Westchester Tech Collaborative, which runs the Meetup. Their continuing presence, he says, will “spur a lot of ideas and business requirements,” creating opportunity for startups to serve them.
Potocki says the county still has a way to go before it builds a density of tech startups, but, he adds, “We’re building a culture.” That’s an important foundation for any tech community and likely to provide a lively springboard for the county’s tech-business growth in 2017. —EP
Despite struggles like increased labor costs and rents, the owners of City Limits Diner say they won't raise menu prices.
Hope Amid the Gloom?
The restaurant industry has always been volatile, and 2017 may incite more quake than tremor. Combine the uncertainty of the new presidency with the reality of brand-new wage and labor laws, and you’ve got a shaky subtotal. This doesn’t even include the onslaught of supermarket and startup meal/ingredient delivery services, plus increased rents and fuel prices.
But take heart: There is a ray of light amid the gloom. Industry management firm SpenDifference contends that lower corn prices and increased supplies could reduce food costs, particularly beef, dairy, and eggs. And food-and-restaurant consulting firm Baum+Whiteman predicts that upwardly mobile Millennials will continue to patronize hip and trendy venues.
Z Hospitality recently opened its eighth restaurant, Mediterraneo in White Plains (top); Bonnie Saran of Little Drunken Chef (below) is worried about profitability in 2017.
photo by Michael Polito
For many of our area’s restaurateurs, the latter is good news. Z Hospitality owner Ramze Zakka is defying the naysayers, anointing the New Year with the debut of his eighth restaurant. His stable of mid-priced, upscale-casual restaurants in Westchester and Connecticut (Mediterraneo, Terra, Aurora, Eastend, Solé) target that demographic, as well as older, affluent suburbanites. “Whatever laws are being implemented won’t increase our menu prices,” he vows. “Raising prices is a lazy approach to dealing with a bump in costs.”
Livanos Restaurant Group (City Limits Diner, Moderne Barn) is also plowing ahead in 2017, opening its seventh upscale restaurant in January on Manhattan’s revitalized Far West Side. Their established customer base is the catalyst. “We have a strong niche: Our clientele likes to dine out; it’s their main source of decompression and enjoyment,” explains co-owner Nick Livanos. At Armonk’s Moderne Barn in particular, Livanos notes, more corporate and private parties are being booked than ever before.
Like Zakka, Livanos does not plan to raise menu prices. He does, however, cite a multitude of concerns, including increased labor costs due to a 2016 mandatory 50 percent wage increase for front-of-the-house service employees. “It’s been difficult for the industry to absorb that,” he says. “In the past, the raise was 2 or 3 percent each year. The industry is working with smaller profit margins than ever before.” Other challenges he cites: “The new laws [of the Affordable Care Act] required us to hire a full-time HR person. There’s more paperwork than ever; the hiring package is now 20-plus-pages long.”
Bonnie Saran echoes those sentiments. Her restaurant empire — which carries the “Little” moniker on all five of her hyper-casual Mount Kisco-based venues — is thriving. She’s also a fierce realist, seeing the writing on the wall in capital letters. “Our margins are [already] low, [so] it won’t be possible to maintain the same pricing structure, due to new wage-increase laws and increased food and operational costs,” she predicts. “In the end, the consumer is going to pay.” Her warning to 2017 restaurateur hopefuls: “Fewer restaurants will be self-sustaining and profitable. Very few people have the know-how to sustain a restaurant.”—Diane Weintraub Pohl