Westchester real estate survey: Buy but don't build

Commuters at the White Plains Metro-North railroad station Commuters at the White Plains Metro-North railroad station board a train bound for Grand Central Terminal. (Nov. 1, 2012) Photo Credit: Xavier MascareƱas

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In 2013, Westchester's real estate market will still appeal to investors who want to buy buildings and developed property. But when it comes to the prospect of new commercial and residential construction in the county? Not so much.

That was the sentiment among respondents to an annual national survey, "Emerging Trends in Real Estate 2013," conducted by the accounting giant PricewaterhouseCoopers and the non-profit Urban Land Institute.

In assessing the outlook for Westchester overall, "I think it's healthy and it's going to get healthier," said survey co-chair Mitch Roschelle, a PricewaterhouseCoopers real estate expert.

The survey ranks 51 top U.S. real estate markets - most of them major urban cities -- for their appeal to potential investors, builders and developers. Westchester and neighboring Fairfield County in Connecticut, which are lumped together as a suburban city market that benefits from its proximity to New York City - ranks No. 25. It follows Chicago (No. 24) and is listed directly ahead of Virginia Beach (No. 26), Philadelphia (No. 27) and Orlando (No. 28) and other cities such as Tampa.

The rankings are based on each location's scores as a potential opportunity for investment, commercial development and home building. Each geographic market was rated in these categories on a scale of 1, which is "abysmal," to 9, which is "excellent," said Roschelle.

As an investment prospect, Westchester/Fairfield racked up 5.59 points, which is "very strong," said Roschelle. "It's highly unusual that a suburban market would have such a high investor sentiment."

But lower scores of 5.14 for commercial development and 4.78 for new housing construction reflect the region's scarcity of available land along with the difficulties confronting developers as they deal with various municipalities, each with their own set of laws and guidelines.

In explaining the region's appeal to investors, Roschelle said that given a build vs. buy choice in Westchester/Fairfield, "it's easier to buy something existing than build something from scratch in an area with a complicated zoning and permitting process."

While Westchester and Fairfield counties are rivals in wooing new corporate citizens and each have specific strengths and weaknesses, the survey considers them similar because they are neighboring counties that have hitched their fortunes to New York City's job market and economy.

Roschelle, who lives in Armonk, told Newsday that the Westchester/Fairfield market will continue to grow because they are transit hubs with bustling Metro-North train stations that transport growing numbers of reverse commuters from New York City to suburban jobs. Key markets in Westchester are White Plains and Yonkers, compared to the Connecticut hot spots of Stamford, Greenwich and Norwalk, he explained.

The region is also increasing its cachet among the crucial 25-to-34-year-old "echo boomer" demographic which is drawn to suburban locales with walkable downtowns featuring amenities such as restaurants, bars and other fun spots.

As the echo boomers save up enough money to become future suburban home buyers, they will become critical players in the region's recovery at a time of historic, unheard-of 50-year lows for both mortgage rates and homeownership, added Roschelle. He said that only about 63 percent of Americans own homes. Thirty-year home mortgages are currently available for 3.7 percent or less.

The current median home price for the Westchester/Fairfield market is $873,000, which means half of the homes sold in te region went for either below or above that price, Roschelle said. "As soon as demand picks up, I predict an uptick in housing prices in Westchester and Fairfield counties," he added.

According to the report, San Francisco will be the nation's strongest real estate market in 2013, followed by New York City (No. 2), San Jose (No. 3), Austin (No. 4) and Boston (No. 5).

The only other suburban city market among the 51 markets to watch is Orange County, which came in at No. 10 with a 6.38 score for investment potential and 5.57 and 5.91 respectively as commercial development and homebuilding prospects. The report said these markets were functioning in a time of economic uncertainty marked by "low gear" growth and limited prospects for new construction.

The results were not a surprise to Laurence Gottlieb, Westchester's director of economic development.

"Even in a difficult economy, Westchester continues to be the place for business investment," Gottlieb noted. "This report only confirms what we already know."

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