Developers Hesitate As Thousands Of Units Come Online In New Rochelle, White Plains

Finding a nook of Westchester County to build in has historically been both difficult and lucrative. 

But the high-barrier-to-entry market, from which many residents commute into New York City, has opened parts of itself up to developers in recent years. Now, some are becoming skeptical of adding too much to the pipeline, investors and brokers said at Bisnow’s Westchester State of the Market event.

“I was on the phone with an investor that just lost out on a suburban Westchester deal we had in the market recently. [They were] upset about it, really wanted it and said, ‘Listen, I'll take anything in Westchester, but I might think twice about New Rochelle and White Plains today,’” JLL Senior Managing Director of Capital Markets Steve Simonelli said.

“From an investment standpoint, there are thousands of units coming online. There's a lot of competition. There's going to be some concessions. The uncertainty is very hard to underwrite.”

Since late 2021, 12,500 new residential units have come to the market throughout Westchester County. Another 15,000 are being built, according to a 2024 report by RM Friedland.

The vast majority of that development — approximately 9,400 units delivered and 13,000 under construction — are in the four largest cities in the county: New Rochelle, White Plains, Yonkers and Mount Vernon.

“There are more four and five-star units in White Plains that were absorbed in the last five years than existed in 2018,” Webster Bank Senior Managing Director Michael Vitale said. “Think about that. That just shows how small the market is.”

A decade ago, New Rochelle, which is just 20 miles north of Manhattan, approved a zoning plan that permitted construction of up to 12M SF of new development.

RXR was selected as the master developer for the downtown, and as part of its first phase of development, the company built four residential properties with 1,000 rental units. Numerous projects by other firms have followed suit.

From 2017 through 2021, New Rochelle added housing at more than double the rate of the U.S., according to research by The Pew Charitable Trusts. Between 2017 and 2023, rents in the area rose 7%, whereas the rest of the country experienced a 31% increase.

“On the affordable side, you have had a mindset shift over the last 10, 12 years,” NRP Group Senior Vice President of Development Jonathan Gertman said onstage at the event. “15 years ago, I was a junior person in the biggest knockdown, drag-out fight in New Rochelle over the rezoning for a lousy 250 units. You would have thought we were burning down the city.” 

During the event, held at the Scarsdale Golf Club, Simonelli compared that pipeline to Stamford, Connecticut. More than 6,300 units were built there between 2010 and 2020, according to Connecticut nonprofit DataHaven. One developer, BLT, said it has constructed over 3,800 apartments in a decade.

“A lot of groups that bought before that supply was finished lost money,” Simonelli said. 

The market stabilized during the pandemic, he added. In areas of Westchester, inflation has helped slow the pipeline and limit oversupply.

“This is probably the first time I'm going to say the rising interest rates were good in my business,” Simonelli said.

During the panel, Titanium Realty Group CEO Diego Hodara, who primarily develops in New Jersey but has recently expanded to Westchester, argued that undersupply in New York City will drive more demand to its northern suburb. 

“I go and develop where I think there are strong fundamentals,” Hodara said onstage. “There is demand in the whole Westchester area.”

Gertman shot back, saying that other areas of the country are both easier to build in and have more interest both from residents and lenders.

“We do sometimes tell ourselves stories about ourselves that aren't helpful. We have to be honest and also aware of what's happening around the country,” Gertman said. “If you were coming in as an investor, blank slate, no roots anywhere in the country, and you said, ‘Where would you want to invest as a multifamily developer, builder, investor, for the next 10 years?’ 9.9 out of 10 people would not choose this region.”

Other parts of Westchester County remain adamantly opposed to new development, panelists added. In many of those municipalities, housing supply is aging and what exists doesn't service the current needs of residents, many of whom are empty nesters.

“There's a lot of red tape because there's a lot of municipalities on top of each other,” Vitale said. “That makes it hard to put housing up. Then there's less of a supply of housing, there’s the same amount of people. What's going to happen? The cost is going to go up again.”

“This is not really rocket science.”