Long Island's Growing Millennial Population Needs More Apartments
After 20 years of decline, Long Island’s population of 22 to 34-year-olds grew from 2010 to 2015, a demographic shift that signals the need for more multifamily housing across the island.
According to a study by the Long Island Association, Suffolk and Nassau counties went from 478,988 in the above age group to 515,391 — contrasted with the same age range’s population of 626,374 in 1990, it gives a sense of just how much room for growth there still could be. And just like all over the country, they are favoring renting over owning homes more than ever.
That means the need for multifamily housing is an urgent one, considering the shortfall that exists in supply. AvalonBay Communities’ Matthew Whalen cited a 10-year-old study by the Long Island Index that said the island was about 100,000 apartments short of demand, compared to Westchester, northern New Jersey and southern Connecticut — and only 6,000 have been built since.
“It feels like it’s been a lot, but it’s just a drop in the bucket,” Whalen said.
It is crucial to have adequate apartment supply to keep millennials in the area, because there are few better recruitment tools for businesses, and for retaining the ones already there. Building for the commuter population is important, as the rise of transit-oriented developments has shown, but it is far from the only reason to build multifamily on Long Island.
“There’s a lot of discussion about TODs, and I think it absolutely has a place on Long Island, but it’s about more than that,” Rechler Equity Partners managing partner Mitchell Rechler said. “In Nassau County, 30% of the workforce commutes into Manhattan, and in Suffolk, only 10% commutes into Manhattan.”
Even so, as New York continues to be a magnet for people and businesses, Long Island’s status as a cheaper alternative for those willing to commute could be a key part of its immediate future. The question is, are TODs adequately capitalizing on the situation?
“I think Long Island is fairly dependent [on TODs], but I think right now we’re just seeing some of those developments mature,” Whalen said. “I think we’ll know more about the success of them in the next three to five years.
“We certainly believe in TODs as a successful way to grow intelligently,” Whalen said. “So when I say the story hasn’t completely unfolded yet, the question is: Where are the jobs needed to support that housing?”
An encouraging development on that front is the recent opening of car sales software company Dealertrack’s headquarters in North Hills, and the recent retention of Canon’s headquarters. Media giant Altice, however, reorganized to move its headquarters to Long Island City and turn its base in Bethpage into an operations center. While the company promises the change will not change the number of jobs at the office, it still is not a positive move.
“It’s bad news for Long Island because whenever the decision-makers of a company work and live outside of Nassau and Suffolk counties and are not involved in our communities, we become vulnerable to further workforce reductions,” Long Island Association CEO Kevin Law told Newsday.
Executives tend to agree that Long Island should not build more offices to attract companies. Rather, the push for more multifamily, if it leads to greater retention of millennials, will be a healthier form of growth.
“We need to bring in and keep more talented people, because right now, everyone is hiring the same people from each other,” Rechler said. “With multifamily, we can offer a workforce an ability to live in a place without a long-term commitment, and then they can take the next step in buying a home.”
Until existing businesses grow or new ones are added, however, new multifamily product will likely continue to be concentrated on TODs — and with the LIRR in a state of extreme disrepair and experiencing its worst delays in a decade, transit might not have the same buzz it had a couple of years ago. As for its effects on rentals, Whalen and Rechler agree that it is too early to tell whether the embattled LIRR is affecting the multifamily market significantly.
“Fifty-year-old guys like me are disillusioned from taking the train every day, but I don’t think younger people are being affected as much by the problems,” Whalen said. “If it continues for two years, it’s certainly going to make other inner-ring suburbs more attractive, so that worries me.”
While improvements to the infrastructure are desperately needed, progress continues toward the approval of a $3B initiative to build a third track on the LIRR, which would come with new stations, new overpasses and certain grade improvements.
“I would think that once [the third track] gets passed and allocated, that the next thing to focus on will be our relationship with Amtrak and some of the original infrastructure issues,” Whalen said.