The Westchester unit of the Building Owners and Managers Association (BOMA) heard the views of three real estate professionals about current and future market conditions during its annual State of the Market meeting that took place recently at 360 Hamilton Ave. in White Plains.
Al Gutierrez, managing director of Jones Lang LaSalle IP Inc., better known as JLL, who is based at the company”™s Stamford office, was the moderator. Panelists included Betsy Buckley, a senior vice president at JLL,: Guy Liebler, president of Bronx-based Simone Healthcare Development,: and Mark Stagg, founder and president of residential developer Stagg Group, also headquartered in the Bronx.
Liebler predicted one area of strength for commercial real estate will be in the on-going demand for new medical buildings.
“We think that we will be busy for several years to come in finding and creating new medical product to replace existing medical product. I”™m doing a project now in Suffolk County, Long Island, for Catholic Health Services of Long Island,” Liebler said. “They are opening up a 60,000-square-foot medical office building, which we”™re developing for them in an area of Suffolk County, where they”™re not today, where they want to serve their patient population. So it really is a combination of sheer growth, whether it”™s a Summit (Summit Health that recently merged with Westmed) that is fueled by private equity, and we”™re going to see more of that or we”™re going to see others whether it”™s White Plains hospital who we know bought all that land.”
Liebler was referring to parcels that formerly hosted automobile dealerships along West Post Road near the hospital. He said that he knows White Plains Hospital needs a new parking garage as well as a new inpatient tower.
“I think that that will all get developed in the next 10 years,” Liebler said. “There”™s more to do, so pay attention to the health care sector.”
Mark Stagg, whose company has done affordable housing projects, said smaller towns and villages need to become more active in promoting affordable housing, just as larger cities generally require a percentage of new residential units to be priced in the affordable category.
“I think New Rochelle has been a leader,” Stagg said. “I think out of probably six towers going on right now, I think two of them, ”” two of those towers ”” are affordable housing, and no one knows the difference. You know, they see it, they drive down (Interstate) 95 and they see a tower going up. The leadership has to be responsible with all that, you know, workforce housing that”™s needed.”
Stagg said that while rising construction costs as well as the prospect of rising interest rates both pose problems for developers, the pressure is increased when the project is in the affordable housing category.
“We can afford, in the industry, to see a little bit higher, but not when we”™re talking overnight 20%,” Stagg said. “On a $340,000 contract, you know, times 20 contracts, where”™s that going to be absorbed? We”™re nervous today, for sure.”
When asked by Gutierrez what she”™s hearing from companies about progress in reopening their offices so workers can return as the pandemic seems to be subsiding, Buckley said the reported rate of workers returning to the office in the New York City metro area still is fairly low at 18%.
“We”™re hearing a pretty consistent message: a hybrid model seems to be the way most tenants are going back and most companies are going back,” Buckley said. “On average, it”™s three days a week. Typically, it”™s at the employees”™ discretion as to what those three days look like.”
She said that people she knows are saying that their lives have changed in two years and they”™re not yet ready to sit on a train for two hours.
Gutierrez pointed out that more than 12,000 residential units are approved or under construction in just three Westchester County cities: Yonkers, New Rochelle and White Plains.
Stagg forecast that new residential construction will continue to be popular.
“I think new construction in itself is apparently very appealing to people,” Stagg said. “They will, you know, bounce around, especially market-rate housing, to come to the new product. There”™s nothing like a new product, right? You walk in that new apartment and it really separates itself from the existing housing stock.”
