Contact Us
News

Developers Implore Long Island Towns To 'Get Their Act Together' Before It's Too Late

WASHINGTON DC 08.16.2017

ALEXANDRIA STATE OF THE MARKET

The Premier Event on Alexandria's CRE Market

Joseph Ney -- Reingold
AJ Jackson -- EYA
Austin Flajser -- Carr Hospitality/Carr City Centers

Long Island was home to some of the first suburbs in the country, and it has benefited for decades from bordering New York City and the Atlantic Ocean. 

Developers Implore Long Island Towns To 'Get Their Act Together' Before It's Too Late
Aerial view of Long Island

But now, as its local competitors like Westchester and New Jersey have embraced massive developments, Long Island is in dire jeopardy of falling too far behind its suburban and urban neighbors to catch up, one if its biggest developers said. 

"If we didn’t have such great assets here on Long Island, we would have been done a long time ago," Renaissance Downtowns CEO Don Monti said at Bisnow's Long Island State of the Market event Wednesday. "We see gridlock in Washington. We have gridlock here on Long Island. And what we need to do is not follow Washington’s example but set our own example by rewarding municipalities that take the steps forward that need to be taken."

Monti is developing major projects in Riverside, Huntington Station, Hempstead and Glen Cove, but he said it took his company a combined 30 years to get all the approvals for those projects. For its project in Westchester's New Rochelle, co-developed with RXR Realty, Renaissance Downtowns needed just 96 days to approve 11.3M SF of development, Monti said. 

"If we want to be competitive here on Long Island, what we need to realize is that we need to have certainty," he said. "We are losing our competitive workforce and there is no certainty here on Long Island."

Developers Implore Long Island Towns To 'Get Their Act Together' Before It's Too Late
EisnerAmper's Lisa Knee, CBRE's Jeff Dunne, KABR Group's Adam Altman, Renaissance Downtowns' Don Monti, Ripco's Marc Kaplan, Newmark Knight Frank's Brian Lee

Not everyone is a loser when a locality pushes back against new development. Owners of existing apartment buildings can benefit from the scarcity a community that does not allow new development generates.

"It creates a supply constraint," KABR Group managing member Adam Altman said. "I’m not saying it’s good for the populace of Long Island, but that’s the other side. It creates scarcity value, and you see that in multifamily on Long Island all over the place."

While apartments are scarce, millennials — the driving force behind the 21st century economy — could become scarcer if more are not built, particularly around the Long Island Railroad stations.  

"If we can’t keep millennials here, who don’t want to drive, we have to adjust," Monti said. "We’re going to see development here if we get our act together in terms of political approvals, and if we realize where the future of this country is going, and it’s going to pedestrian, walkable environments."

While millennials, or lack thereof, are a source of stress for real estate owners on the island, baby boomers are helping to drive Long Island's short-term economy in the right direction as the healthcare industry takes off. Long Island has its fair share of malls, but unlike many around the country, the retailer exodus is not making them close their doors, just open them to different tenants.

"There are about 40 or so large-box [retail] vacancies on the island in the last couple of years. We represented about 18 or 20 of them," Ripco President Mark Kaplan said. "About half went to hospitals, taking 60K SF boxes and turning them into ambulatory care centers or some sort of outpatient services. In what would have otherwise been a tough retail market on the island, medical has really stepped up."

Healthcare also is providing a boost to the office market, according to brokers who are active on the market, like Newmark Knight Frank's Brian Lee. The providers have taken about 10% of the available office space on the market in recent years, Lee said, making up for a decline in financial tenants.

But the short-term gain of a healthcare tenant does little to assuage the real estate community that is looking at the long-term health of Long Island with trepidation.

"The urban areas, like a Mineola, like a Hicksville, that are on a train station, are the most attractive to millennials," CBRE Vice Chairman Jeff Dunne said. "The towns need to come around. Towns that have been saying 'no, no, no' for years are seeing their tax base erode."

;