Suburbs Hold Key To The Housing Crisis, But Building Their Way Out Leads To Growing Pains

Many leaders in economics, politics and business have long pushed high-density, transit-oriented residential buildings as a way to dig New York and cities across the country out of the housing crisis.

Developing those projects at the scale required takes an awful lot of literal digging, too, as communities trying to be a part of the housing solution are discovering. New Rochelle, just north of the Bronx, is implementing a $4B downtown development plan led by master developer RXR, which includes not only thousands of apartments, but also infrastructure upgrades, like new water and sewer lines, and it is not without its challenges.

“I won't lie to you, the growing pains are difficult. If you live in and around the downtown right now, if you work in and around the downtown right now, it's a challenge to get around,” New Rochelle Mayor Noam Bramson said at Bisnow's Westchester and Fairfield State of the Market event Tuesday.

The Westchester County city of nearly 80,000 people offers a rapid zoning approval process that allows developers to build towering apartment buildings in its downtown, and build them quickly, if they provide a community benefit.

“There's a lot of noise, there's a lot of disruption. But yet, it is absolutely necessary to secure our future," Bramson said. "And I think most people — even those who are dealing with the day-to-day headaches — recognize that this all adds up to a future from which we will all benefit, that we're literally laying the foundation of a better community to come.”

Creating better communities, particularly those with enough housing, has come into even sharper focus since the pandemic caused major societal upheaval. Soaring real estate prices, coupled with major rent spikes and the highest inflation in a generation, are putting pressure on governments and real estate owners to come up with a solution.

Improving the livability and housing options in the New York metro area, as well as the role the greater Tri-State region could play in supporting the five boroughs in easing the housing crisis were pressing topics discussed at the Bisnow event Tuesday. There is certainly no shortage of challenges, as many of these areas have affordability issues of their own.

“We need at least 11,000 units of affordable housing across the county, that's every municipality has a need,” Westchester County Director of Economic Development Bridget Gibbons said. “We're really putting our thinking caps on to figure out how we can incentivize more.”

Rising rents in New York City garner significant attention, but prices outside the city have also seen large increases this year. White Plains has experienced the fastest-growing rent in the New York City metro area, according to Zumper, with prices up 37.3% this month from this time last year. A one-bedroom there now rents for an average of roughly $2,760 per month.

“New York City relies on us for their workforce housing. They can't build the apartments that they rent at the same level as ours,” Gibbons said. “They really do need us to keep up with the needs of the region.”

The Department of City Planning found in 2019 that lack of development outside the city is partially to blame for the fact that job growth has far outpaced housing development. Analysis from New York University’s Furman Center has found that New York has some of the most exclusionary zoning in the country, which has slowed housing production, and it described New York’s suburbs as “national laggards” in housing development.

Gov. Kathy Hochul had put two ideas on the table in her budget plan aimed at addressing the problem. One proposal would have allowed for multifamily on single-family lots, another would have allowed new apartment buildings close to rail stations. But she included neither option in her formal budget after getting local pushback, per Politico, and they were shelved when the budget was approved last week.

In New Rochelle, however, the city government introduced a 90-day approval process in 2015 in order to fast track development, a system that it says is “unrivaled” in the Tri-State area.

Bramson said last year there was an adjustment to the zoning code to provide for more on-street outdoor service and 3,000 additional residential units in lieu of some office.

“Our zoning code allots a substantial amount of space for office — a little less than it did before,” he said. “But still, that goal and vision is encompassed within the city's plans. But it's going to be up to the market to execute.”

Joseph Graziose, a senior vice president at RXR, agreed there is still a lot of work, too, in what he calls “the ground floor” in New Rochelle. While RXR has developed several high-rise apartment towers, he said the downtown still lacks a vibrant street life.

“It's [about] bringing people to a place where they can call home, but more importantly, a place where they can get out on the street, walk around, take their family for a walk, take their dog for a walk, grab a cup of coffee,” he said. "We all collectively have to do a better job of creating that environment.”

Still, from a housing development perspective, LMXD Managing Director Katherine Kelman said a supply shortage means the demand for developing in the suburbs remains strong, even if the political appetite isn't.

“There's a lot of pent-up demand for rental housing, with single-family home prices going up,” she said.

LMXD is a new venture from L&M Development that creates mixed-income developments with a focus on environmental sustainability and public-private partnerships. The company, along with Wilder Balter Partners Inc., delivered a $190M, 28-story New Rochelle residential building called Stella that has 380 units, 285 of which are market-rate properties starting at $2K per month, New York YIMBY reported.

“There's a regional sort of housing supply crisis, so I think that the need for rentals continues to be there," Kelman said. "So I think investment thesis has only been strengthened for the downtown area, for transit-oriented area that allows commuting regionally.”

The ability to move around the region easily is only set to improve, Catherine Rinaldi, the president of MTA Metro-North Railroad, said at the event. She said the East Side Access project, which is due to open at the end of this year, will bring 11 Long Island Rail Road lines into Grand Central Terminal, and is a benefit for the greater region — not just Long Island.

“I think it opens up the universe of that kind of connectivity between Queens, Long Island and Westchester that really doesn't exist in a meaningful way right now,” she said. 

Penn Access, which would  bring the New Haven line into Penn Station in the coming years, will also streamline the entire region, she said.

“All of these projects that knit together the region in unprecedented ways … [and] provide a lot of new opportunities for growth and vitality, that don't exist with the current network," Rinaldi said.