Housing costs that make it difficult for young workers to live on Long Island will slow the region's economic growth this year and in the coming decade, local economists said.
“What will constrain growth is housing affordability,” said Richard Vogel, an economist and dean of Farmingdale State College’s business school. “The young workers that are needed to fill jobs as the population ages, cannot afford to live here. That’s really going to limit growth.”
In addition to the high cost of living and doing business in Nassau and Suffolk counties, worries about the trade war will slow the local economy, said John A. Rizzo, chief economist for the Long Island Association business group and a Stony Brook University professor.
Still, the Island's economy remains healthy by most measures.
In the past year, unemployment remained at a record low and the number of people employed was at an all-time high. Consumers were confident about their immediate financial future, according to surveys by the Siena College Research Institute near Albany.
Growth is likely to be modest this year, as it was in 2019, though it could accelerate if the United States and China resolve their trade differences, Vogel and Rizzo said.
The Island’s gross domestic product, the sum of all goods and services produced here, increased about 2% in 2019 to roughly $160 billion, they said.
Vogel predicted GDP growth of between 1.5% and 2% in 2020. Rizzo said it would be about 1.7%.
“The Long Island economy is already at full employment, it’s pretty much at its peak,” Rizzo said. "Lower percentage growth in the context of full employment is not necessarily a bad thing,” he said. — James T. Madore
An aging population and an emphasis on preventive care, cancer care and technological advances will lead to continued growth in the health care sector in the decade ahead, industry experts said.
Health care already represents one in five private sector jobs in the region, said Shital Patel, principal economist for the Long Island region for the state Department of Labor. The sector grew by 11,000 jobs, or about 5%, last year.
The state predicts health care employment on Long Island will grow by 28.5 percent between 2016 and 2026 — the fastest pace of job growth of any industry — adding 67,760 jobs.
New Hyde Park-based Northwell Health, the largest private employer in the state, added more than 7,000 employees in the last two years, and has crossed 71,000 employees in total. The growth has been driven, in part, by an increase in outpatient facilities.
Northwell said its growth will continue. It predicted operating revenue will rise by more than $1 billion in 2020, to $13.5 billion.
The health system said it will invest $1 billion in improvements in 2020, including more beds and operating rooms at Southside Hospital in Bay Shore, a surgical pavilion at North Shore University Hospital, a new surgical suite at Cohen Children’s Medical Center and an emergency department expansion at LIJ Valley Stream. — David Reich-Hale
Long Island home prices are likely to keep making gradual gains this year, with low interest rates and high rents adding to the appeal of homeownership, real estate experts said.
The region’s home prices have been steadily rising since 2013, in year-over-year terms, said Jonathan Miller, president of Manhattan-based appraisal company Miller Samuel. With rates expected to stay low, he said, in the coming year, “we may just see more of the same."
Looking ahead to the next 10 years, though, the Island’s housing market could be in for a bumpier ride, since home prices are increasing faster than incomes, he said.
“At some point pricing can’t continue to rise as it has, when wage growth is not keeping up,” he said.
The Island is likely to see more apartment construction, particularly in Westbury and Hicksville over the next year or so, said Mitchell Pally, chief executive of the Long Island Builders Institute. Over the coming decade, more and more communities are likely to see increased downtown development, and some underused shopping malls could be converted into residential or mixed-use communities, he said. “It’s a perfect opportunity for redevelopment,” he said. — Maura McDermott
After a year of consistently low unemployment and modest job gains on Long Island, 2020 will bring with it continued obstacles to finding workers in a still tightening labor market.
“Since January of 2018, at the national level, the supply of jobs has been greater than the number of job seekers needed to fill them,” said John A. Rizzo, chief economist for the Long Island Association business group.
The labor shortage means Long Island employers and employers across the country are likely to run into increased “difficulty matching people to the available jobs,” Rizzo said.
He added that the classic way for companies to "deal with the labor shortage is to raise the wage rate.”
Rosalie Drago, regional director of the Workforce Development Institute, a nonprofit that helps manufacturers find and train workers, said employers are “going to need to shift their approach” to attract talent.
Some employers have created “a gap for workers because they’re asking for degrees and credentials that aren’t needed,” and they will have to be more flexible in their hiring in order to fill positions, she said.
Executives who collaborate with others in their industries are likely to have an easier time filling job openings, she said.
“Collaboration among industry clusters, employers with shared occupational needs, is critical,” Drago said. They should work together to create training programs and apprenticeships with state partners like the Labor Department, she said. — Victor Ocasio
Long Islanders' demand for convenience will continue to reshape retail in the area.
“Probably one of the biggest changes is how we get the product, meaning using digital [methods] to do most of the homework,” said Marshal Cohen, a retail industry expert at the NPD Group, a market research firm based in Port Washington.
From getting groceries and food delivered to buying online for store pickup, Long Islanders, like many consumers across the nation, are demanding convenience, he said.
Also, the concept of special sales during specified periods is changing, as was evidenced during the 2019 holiday shopping season, Cohen said.
Holiday promotions this year were held throughout November and December. Retailers increasingly will follow that practice of having sales for long periods throughout the year, similar to what Macy’s already does, Cohen said.
Another expert expects the nails to finally be put through the coffins of Kmart and Sears next year.
“There will be a total eclipse of what had been the biggest and most famous retailer in America for the better part of the 20th century,” said Burt Flickinger III, who founded Manhattan-based Strategic Resource Group and has studied Long Island retail.
Exits by Kmarts and Sears would create more opportunities for discount retailers, such as Target and Walmart, that are seeking to negotiate favorable lease terms for prime real estate in the Long Island market, he said.
Target already plans to open a store in a former Sears in New Hyde Park, pending zoning approval.
Mall and shopping center owners also are looking to fill vacant retail spaces with businesses that aren’t being hurt by online competition, such as medical offices, gyms and restaurants.
— Tory N. Parrish
Without the development of a convention center or the completion of ongoing projects such as the Nassau Hub — a multimillion dollar, mixed-use site on 72 acres of parking lot space surrounding Uniondale's Nassau Coliseum — the growth of LI's tourism industry will remain "moderate or flat," said Kristen Jarnagin, CEO and president of Discover Long Island, a nonprofit that promotes tourism.
"That's because we've reached peak performance of occupancy and room rates," she said.
Michael Newman, vice president of the 50-member Long Island Hospitality Association, said Long Island hoteliers can expect a 2% decline in hotel occupancy in the next couple of years as new hotel rooms come online and some consumers turn to services such as Airbnb. "But the development of new attractions could easily reverse that decline," said Newman, who is corporate director of sales and marketing for Blue Sky Hospitality Solutions, owner of the Hilton in Melville.
He added that a single big event, such as last year’s PGA golf championship that attracted an estimated 200,000 fans to Bethpage Black, can boost annual occupancy rates. No similar event is scheduled on Long Island in 2020, he said.
The tourism industry, however, remains "strong and highly important for our economy, region and residents," Jarnagin said. Visitor spending on the Island exceeded $6 billion in 2019, up 4.5% over 2018, she said, adding that the industry supported nearly 82,000 jobs.
— Daysi Calavia-Robertson
Factory employment is expected to hold steady at 72,000 jobs this year as expansions planned by makers of drugs, vitamins and satellite components offset cutbacks by other manufacturers.
Pharmaceuticals, the largest manufacturing sector, is hiring, with Contract Pharmacal Corp. and Topiderm Inc. each adding warehouse space to make room for more production.
CPC, with 1,300 employees at nine buildings in Hauppauge, makes generic over-the-counter medicines, vitamins and nutritional supplements.
Topiderm, with its headquarters in North Amityville, employs more than 450 people making skin cream, sunscreen and acne medicine.
“We intend to grow the company another 100% from where it is today,” said Topiderm president Eric K. Stern.
Aerospace and defense, while no longer the dominant manufacturing sector, will see expansions as well.
Frequency Electronics Inc. is upgrading its Uniondale facility to take advantage of new programs established by higher military spending. Last year, the company won a $4.5 million contract to supply timing and microwave frequency generation systems for a space project tied to a group of satellites.
Still, there will be plant closings.
Amneal Pharmaceuticals Inc. has announced plans to close its Hauppauge factory this year, eliminating 220 jobs. The company also will let go an undisclosed number of workers at its larger factory in South Yaphank.
The manufacturer of generic prescription drugs has been losing money because of increased competition, executives said. — James T. Madore
The latest crop of Long Island startups — whose work ranges from cybersecurity to virtual reality to customized viruses — are attracting funding, creating products and advancing the area's entrepreneurial culture, officials said.
Some of Long Island's most iconic companies have sprung from homegrown startups, including aerospace contractor Grumman Corp., whose lunar module delivered men to the moon, and hedge fund Renaissance Technologies LLC, a former tenant of the Long Island High Technology Incubator at Stony Brook University that helped pioneer computerized investing.
Among the promising startups:
•Code Dx Inc., a Northport cybersecurity company that recently won $2 million in a venture capital pitch contest;
•Labrodex Inc., a Melville developer of virtual- and augmented reality software that is working on follow-ups to Scraper: First Strike, a sci-fi game released in November 2018;
•CodageniX Inc., a company based at the Broad Hollow Bioscience Park at Farmingdale State University that uses software to revise the genomes of viruses and create customized vaccines or cancer treatments;
•ThermoLift Inc., a Stony Brook University incubator company that is developing an air conditioner combined with a cold-climate heat pump and a hot water heater that can be powered by natural gas.
Startup success will hinge on connecting financial support to Long Island's brainpower, officials said.
"Science and research out of our local institutions are attracting seed money," said Kevin S. Law, a board member of Accelerate Long Island, which seeks to connect academics to the business community in an effort to commercialize their work. "That's the recipe," said Law, who also serves as chief executive of the Long Island Association, a regional business advocacy group. — Ken Schachter