Why Own When You Can Rent?
The rental market in Westchester is booming — and showing no signs of slowing down.
A waterfront unit at GDC’s 1177 @Greystone in Yonkers.
Photo by Philip Jensen-Carter
What does the eye-catching landscape of the Yonkers riverfront have in common with the top of a hill that overlooks the city of Peekskill? What about the sprawling downtowns of New Rochelle and White Plains and a former movie theater in Harrison?
If you’re a developer, these are each prime locations to capitalize on one of the biggest trends in Westchester’s real estate market: amenity-laden apartment complexes.
In 2017, the City of Yonkers approved development projects comprising more than 3,000 apartment units, up from 2,800 in 2016. White Plains in 2018 gave the green light to almost 1,700 units over the course of the year. That same figure topped 2,500 in New Rochelle. Some developers estimate there could be as many 10,000 apartment units in various stages of development across the county.
For some, it may seem like the construction of these towering rental buildings has taken the county by storm. But for many developers, this boom has been a long time coming.
“For years, there were very few first-class, high-end developments in Westchester,” says Martin Ginsburg, president of Valhalla-based Ginsburg Development Companies (GDC), “to the point where a lot of people who were looking here ended up in Stamford or somewhere else in Connecticut.”
Harbor Square in Ossining, also from GDC, offers luxury living and Hudson River views. Photo courtesy of GDC
Ginsburg is one of the leading forces behind the luxury-rental trend in Westchester. Last year alone, his company unveiled 178 rental units at Fort Hill Apartments in Peekskill, began leasing at the 55-unit complex 1177 @Greystone in Yonkers, and shelled out $83 million for The Westchester Financial Center in downtown White Plains, which the company plans to convert to a mix of residential, office, retail, and restaurant spaces. Those properties joined Ginsburg’s portfolio, which includes River Tides, a 330-unit rental building at 1133 Warburton Avenue in Yonkers, and Harbor Square, 188 units on Ossining’s waterfront. “I think Westchester is at the cusp of being discovered,” Ginsburg says, comparing Westchester to the Long Island City of years past. “My feeling is people in general have a very bad sense of geography. There are a lot of people in New York City who think Westchester is upstate.”
That view has proven somewhat difficult to alter for many developers who have ventured into Westchester County.
“I think it has a lot to do with perception,” says Avi Abadie, principal at Manhattan-based AMS Acquisitions. “People might think, Yonkers — isn’t that far from the city? Yonkers isn’t one of the boroughs yet has a commute to Midtown that’s faster than most areas surrounding Manhattan.”
GDC’s Fort Hill Apartments in Peekskill sit on the site of the former St. Mary’s convent.
AMS is betting big on Yonkers and has conducted a buying spree there in recent years, beginning with its $17.5 million purchase of 92 Main Street, a 78,000 sq. ft. mixed-use building, in 2017. A year later, the company spent $9.5 million to purchase 86 Main Street, a six-story, 70,000 sq. ft. office building that sits opposite its first acquisition.
In October, AMS agreed to pay $16 million to Yonkers to purchase Chicken Island, a six-acre property in the city’s downtown that officials say has been underdeveloped for decades. For that area, AMS is eyeing a range of new businesses, apartments, and a luxury hotel. The company also recently purchased for $18.3 million the former Teutonia Hall site at 55 Buena Vista Avenue, where it plans to construct a 24-story tower with 361 apartments.
“Our strategy is to identify and invest in markets we believe have a lot of growth potential,” Abadie says, noting that Yonkers is one such area that possesses all the key components his firm seeks in a potential development site: a safe environment, a strong retail landscape, and convenient transportation. “The downtown Yonkers market has all the right ingredients,” he says.
AMS Acquisitions plans a mixed-use development that includes high-end rental units.
The NYC Effect
Abadie adds that the surge of new rental apartment stock in Westchester was “just a matter of time.”
“A lot of the outer boroughs are growing, and rents have hit certain levels where now it’s pushing things a little outward,” he says.
Charles Epstein, vice president of development at LMC, A Lennar Company, notes that renters have increasingly sought out convenient alternatives within easy commuting distance to New York City, “leading more renters to gravitate to the urban-suburban ring cities, such as White Plains.”
“For years, there were very few first-class, high-end [rental apartment] developments in Westchester.”
LMC has set its sights firmly on White Plains, where it plans to construct a 434-unit development on Mamaroneck Avenue. The city’s common council is also reviewing LMC’s plans for 814 units in two 28-story towers as part of the redevelopment of the White Plains Pavilion property.
It’s not just the renters who are being pushed out of New York City, though. It’s developers, too.
“New York has become an increasingly difficult place to develop rentals,” Abadie says. “A big reason is because land prices have been astronomical in the last several years, and it just doesn’t [make sense] to build rentals.”
Matthew Whalen, senior vice president at AvalonBay Communities, says his company has had “a real hard time in the last two to three years competing with condo developers” in New York City.
The company is in the midst of a major redevelopment along the Hudson River in Yonkers, where it plans to erect 609 rental units on Alexander Street. In Harrison, the developer is eyeing 143 apartments and 27,000 square feet of prime retail space near the town’s train station.
AvalonBay Communities is erecting 609 rental units on Alexander Street in Yonkers. Photo courtesy of AvalonBay Communities.
Location, Location, Location
Regardless of where these new rentals are erected across Westchester, developers agree that building these luxury complexes near a transportation hub is a necessity.
“Some Millennials, they really have a desire to live in a transit-oriented community around a train station, where they can walk to work, or walk to the train, walk to the restaurants and the culture. The trend is that they don’t want that suburban lifestyle,” says Bridget Gibbons, director of economic development for Westchester County.
Several communities in Westchester, from Tarrytown to Port Chester, are in various stages of developing their own transit-oriented zones. In Mamaroneck, developers have unveiled The Mason, 96 luxury rental apartments just steps from the Mamaroneck train station.
“Being close to the train line is key,” says Joel Halpern of Halpern Real Estate Ventures, the firm developing The Mason along with Rosen Development Group. “It’s critical to development.”
At The Mason, where rents range from $2,303 for a studio to $5,331 for a two-bedroom townhouse, Halpern says he hopes to attract a strong contingent from the Millennial and empty nester demographics.
“We’re seeing a very interesting trend now where Millennials, who in the past moved back into major urban clusters, are now moving outside of the major urban clusters, like New York, and moving into the suburbs,” Halpern says. “But they’re still looking for that urban lifestyle.”
In White Plains, LMC, A Lennar Company, plans a 434-unit development on Mamaroneck Avenue. Photo courtesy of LMC, A Lenner Company
Rent vs. Own
For many of the tenants moving into these new developments, renting is seen as a favorable alternative to home ownership. “We’re seeing a lot of Millennials who are just not looking for home ownership right now,” says Denise Friend, Westchester County regional manager for Better Homes and Gardens Rand Realty. Along with being a cost-effective choice for some, especially here, where property taxes are among the highest in the nation, renting can also allow residents to shrug off some of the burdens of owning a home.
“Being close to the train line is key.... it’s critical to development.”
“Some people certainly still have this American dream of home ownership, but today I think people are looking more at their quality of life,” says Randy Salvatore, CEO of RMS Companies, a Connecticut-based developer erecting Stratus on Hudson, a 74-unit mid-rise in northern Yonkers.
“We’re seeing a lot more empty nesters make the decision and say, ‘Hey, wait a minute: Why do I want to maintain this giant house and pay this giant property tax bill? I don’t really feel like dealing with the landscaping anymore,’” Whalen says. “We’ve seen a real rise in demand from what we call renters by choice. They could do whatever they want. They could go to New York City and buy a condo; they could go to Florida and move into a retirement community; but they all still have ties to the area and want to stay here.”
It's All About Amenities
From empty nesters to Millennials, developers note that one key component these target demographics are searching for is an assortment of perks.
“The amenities package is very important, and the amenities space is really an extension of the square footage that tenants are renting outside of their apartments,” says Rich Murphy, managing director at Mill Creek Residential Trust LLC, the developer behind Modera Hudson Riverfront in Yonkers. “Your home doesn’t end just inside the four walls you’re paying rent on.”
Over at The Mason, Halpern hopes to draw potential renters with offerings that include communal meeting spaces, a play area for children, and a lending library, which will allow tenants to use and share everything from cooking utensils to vacuums to novels.
“The biggest shift in the market is that renters are becoming more educated, and they’re looking for a specific lifestyle,” Halpern says. That includes buildings that are environmentally conscious and aware of sustainability, as well as the all-important amenities package. Large communal spaces, from rooftop bars to lounges dotted with plush seating, are staples of many of these new complexes.
Renters, Whalen says, “want to be able to go to a community room with a fireplace and a flat-screen TV.... It’s really part of the social experience in these buildings.”
Another necessary component, Whalen says, is a “well-thought-out, spacious fitness center.” Many of the fitness centers housed within these luxury apartment complexes feature yoga rooms, spin centers, or access to personal trainers. Others feature video-on-demand workouts or panoramic views of the Hudson River.
A Change in Views
Another factor that has allowed the rapid expansion of luxury rentals in Westchester is a perceived attitude shift among government officials and community members.
In New Rochelle, the city selected a joint venture that included Long Island-based RXR Realty as its downtown master developer in 2014. Since that time, RXR has kicked off the development of two 28-story towers at 26 S Division Street and another 28-story tower at 587 Main Street. The city also revised and streamlined its zoning process, allowing developers to begin their projects in the downtown area in just 90 days.
Those changes were part of the reason New Rochelle-based ELD Properties purchased 19 parcels within the city, where it now plans to create “an entire new transit-oriented neighborhood,” according to Anthony Hammel, who co-owns the development company with his brother William.
Within the city’s Burling Lane triangle, ELD is in the process of erecting a 73-unit studio apartment complex, NewRo Studios, which will also include working space for local artists. ELD is also set to unveil The Millennia, a Millennial-targeted, six-story luxury property complete with a 24 foot waterfall and putting green, later this summer at 20 Burling Lane. The company hopes to attract other Millennials at The Grand, which is currently with the planning board. They expect to begin construction in Q4 of this year, with a targeted completion date of July 2020.
Modern luxury at The Mason in Mamaroneck, where rents range from $2,300–$5,300. Photo by Kevin Chu
“New Rochelle has really gone after this whole trend in a very big way,” says John Verni, partner at Mamaroneck-based Verco Properties.
Harrison has also been more open to development recently, Verni says. In October, his company broke ground on the Harrison Playhouse Lofts. Once completed, the project will transform the former Harrison movie theater into 36 luxe rental units.
“The amenities package is very important, and the amenities space is really an extension of the square footage that tenants are renting outside of their apartments.”
Verni, whose company initially purchased the movie theater property more than a decade ago, noted that Harrison has “been a little bit behind” in terms of development but is now working to create a more vibrant downtown.
That approach is a stark contrast to the one now being taken by neighboring Mamaroneck.
“The village doesn’t want to grow too much more,” Verni, a member of the village’s planning board, says of Mamaroneck. “They’ve done some high-end development, but now they’re trying to slow that down.”
After considering numerous large-scale development proposals, including Halpern’s The Mason, Mamaroneck put a construction moratorium in place in last year, effectively halting all new construction on residential buildings with three or more units.
In nearby White Plains, the city created a transit zone to maximize economic development potential surrounding the Metro-North Station. AvalonBay’s Whalen says that officials from both Harrison and Yonkers have also encouraged his firm’s efforts to invest in their respective municipalities.
Rentals By The Numbers
The Urban-Suburban Life
While certain municipalities in Westchester have made positive strides in recent years to provide residents with the urban-suburban lifestyle they’re searching for, developers believe there is still room for growth.
“A lot of these downtowns are already pretty neat places to live, but over the next 10 years, I think they’re really going to pop and become destinations,” Mill Creek’s Murphy says.
His firm’s Modera Hudson Riverfront, a six-story, 324-unit complex at 20 Water Grant Street in Yonkers, welcomed its first tenants early last year.
RXR Realty’s 360 Huguenot project looks out over the Sound Shore in New Rochelle. Photo courtesy of RXR Companies
“We’ve got a great site right on the riverfront in downtown Yonkers that is starting to boom with restaurants and bars and shopping,” Murphy says. “I think what we’re going to see is a tremendous increase in foot traffic as not only our project floods the streets, but other communities that are under construction do, too.”
Modera Hudson Riverfront sits just half a mile from AvalonBay’s project, as well as two other major developments: RXR’s 442 units at Sawyer Place on Main Street and a nearly 1,400-unit complex in the works by Manhattan’s Extell Development Co.
“A lot of these downtowns are already pretty neat places to live, but over the next 10 years, I think they’re really going to pop and become destinations.”
But with the influx of rental units, both established complexes and those in the pipeline, it begs the question: Is the market nearing a point of oversaturation?
“A lot of people say you must be concerned about competition, but absolutely not,” Whalen says. “I think it’s great, and I think that there’s room for all of us.”
“Right now, I don’t think we’re even close,” adds RMS’ Salvatore. “I think we have a long way to go.”
Gibbons agrees. “The issue was that there weren’t enough” rental apartments previously, she says. “This is filling a need. It’s not over saturating the market by any means.”
A former movie theater is becoming Harrison Playhouse Lofts, a 36-unit luxe rental community. Rendering courtesy of Stephen Tilly, Architect
Whalen points to the company’s existing apartment complexes in Westchester, noting that despite the rising number of new rentals across the county, those properties have not seen any significant increases in vacancies. “In general, we have not been affected, and the reason for that is that the demand and the need are just so great,” he says.
One variable that could shake up the market, says Rand Realty’s Friend, is growing families. Once these Millennial renters begin to have children, they may decide their renting days are over and instead look to purchase a home in the area, one that offers a larger footprint.
There are other concerns that could affect the market’s ability to digest the amount of supply headed to Westchester, says Whalen, whether it’s rising interest rates or an increase in construction costs.
“Those two factors alone can turn the spigot off,” he says. “People who aren’t considering that are probably missing the boat.”
For now, though, the “boat” seems to be full of potential renters eager to select a new luxury high-rise as their home-sweet-home.
Aleesia Forni is a writer and photographer based in Westchester. Though she does not live in a luxury rental apartment complex, years of writing about the upscale-living trend makes her wish she did.