Lennar recently announced it’s buying the Westchester Pavilion in White Plains and sinking $175M into remaking the property as a walkable mixed-use retail district. It’s part of a shift toward denser and more walkable suburban CBDs and why we're excited to host Bisnow's Westchester & Fairfield State of the Market event, May 6 at BLT's Harbor Point in Stamford. Meantime, panelists share four major challenges.
1. Transit Limitations
LCOR SVP James Driscoll says an east-west rail link across Westchester, for which plans are currently stalled, could do a lot to make the area more attractive to Millennials who often don’t drive. (James says when he looks around on the roads in Westchester, he’s amazed how few drivers under 40 he sees behind the wheel.)
2. Uncertainty in the Financial Sector
CBRE EVP Tom Pajolek says a contraction may be on the horizon for the financial services firms that Fairfield’s relied on to take office space. Cushman & Wakefield earlier this year was retained to market UBS’ North American HQ in Stamford’s CBD. And GE recently announced it’s shedding its finance operations, which are largely based in Fairfield. The silver lining, Tom says, is that younger companies like Datto, a data storage firm that opened a 100k SF HQ in Norwalk last year, are helping to diversify the local tenant base. But since firms with younger workforces tend to favor urban areas, Tom says their growth may be limited to walkable, transit-rich areas like Stamford’s CBD that are seeing new office and mixed-use projects like Habor Point. Tom says even though Q1 office leasing was active in Stamford, absorption was still negative.
3. The "Not in My Backyard" Effect
James says even with good transit links, multifamily’s foothold can be tenuous in suburban towns where local officials don’t want to change the local character. “The biggest issue is that when some municipalities see big projects they get scared because they don’t like to see big numbers,” he says. The tricky part, James points out, is that amenities like on-site support staff or concierge services are what lure renters to the suburbs, and the dollars and cents of those amenities only add up for projects over about 120 units. But there could be a silver lining here, too: James says he sees a coming demand for built-to-own townhouses near suburban CBD’s once younger renters, lured by developments like LCOR’s 15 Bank Street, a 561-unit development in White Plains on track to complete its second phase by early 2017, are ready to buy. He says those projects are likely to face less flack from local planning boards than big, vertical multifamily developments.
4. Vacant Office Space
There’s a flip side to the pockets of urbanization in the suburbs: all those office parks along I-287 have a lot of vacant space, and James says they’ll have a hard time attracting the kinds of younger firms that Stamford’s CBD is seeing. IBM opened its Watson division at 51 Astor Place in the East Village last year rather than fight an uphill battle to bring young talent to its Armonk HQ. As James points out, vacant office park space means a hole in local tax coffers, which’ll have an impact on funding for transit and other infrastructure needed to bolster development in the parts of the area where it’s doing well.
