With the price of residential homes continuing to increase and mortgage rates going up, city residents have looked with renewed interest toward the rental market. That is propelling demand for rentals in multi-family buildings, particularly those with attractive retail amenities—a trend that picked up steam during the pandemic, when many people were staying closer to home.
New York City’s multi-family market is on the rebound from a decline and is now outperforming multifamily sales across the country. New York City saw 268 transactions involving 326 buildings in the first quarter of 2023, with a combined value of $2.11 billion, according to the Q1 Multifamily Quarter in Review, New York City from Ariel Property Advisors. The largest transaction reported in Q1 took place in Brooklyn, with 137 N 10th Street & 44 Berry Street selling for $68 million, according to Ariel’s’ report.
Meanwhile, demand for retail space is on the upswing. Available storefronts in the SoHo, Madison Avenue and Third Avenue districts dipped to historic lows in Q1, according to data from Cushman & Wakefield. Average asking rents across all submarkets in New York City rose by 3.8% to $20 per square foot. That was the first average annual increase since Q1 2015, when there was a peak.
These interlocking trends have propelled multi-family activity across the five boroughs.
“The rebound in the demand for multifamily rental buildings, along with the resurgence in retail development, has provided our company with a unique opportunity to develop successful mixed-use properties throughout the TriState Region that offer luxury living with the convenience of ground-floor retail,” said Louis Cappelli, founder of The Cappelli Organization.
Investors are buying up Class B and C properties in Astoria, Bushwick, Prospect Park, Williamsburg, and Washington Heights, according to Marcus & Millichap’s New York City Multifamily Report for Q2 2023, with more than 50,000 rentals are underway. Major projects include Lincoln at Bankside in the Bronx, where local Class A vacancy space remains at less than 1.5%, the report found.
The activity has extended to Westchester County, where low home inventory levels have driven unit sales pricing to the lowest level in a decade, according to research by brokerage Houlihan Lawrence. White Plains, for instance, is in the midst of a $650 million redevelopment plan, targeted for completion in 2025, that will include four multi-family units, dining, and retail.
In White Plains, The Cappelli Organization is in the midst of construction on three major projects. First, there’s Hamilton Green, a state-of-the-art residential project that will replace the former White Plains Mall. Hamilton Green will include four mixed-income multifamily buildings with a total of 860 rental units. The complex will have 78 on-site affordable units, more than one acre of accessible open space, and a variety of dining, retail and commercial spaces.
Another new addition to White Plains is The Mitchell, a mixed-use project with two 15‑story buildings and one six‑story building at 133 Mamaroneck Avenue. The Mitchell includes 434 residential units, as well as ground floor retail and restaurants.
And at 25 North Lexington Avenue, Cappelli is building 25 North Lex, a luxury complex that will include 500 residential rentals, as well as nearly 60,000 square feet of amenities and 16,000 square feet of ground floor retail space.
“Downtown White Plains is undergoing an unprecedented multifamily rental building boom driven by its high quality of life and easy access to the Metro-North Train,” said Cappelli. The area surrounding the recently renovated Metro-North Train Station is the focus of several major transit-oriented developments that we are building that offer a host of lifestyle amenities, plus the convenience of commuting to Grand Central Terminal in less than 30 minutes.”
New Rochelle is also attracting interest, as it undergoes a redevelopment boom. Anderson Plaza recently reopened, opening up public space in the downtown area. The plaza is designed to support local businesses and civic and community activities. “Like downtown White Plains, our mixed-use projects in downtown New Rochelle are benefiting from the popularity of transit-oriented development,” said Cappelli. “Not only are our buildings walkable to the Metro-North Station but New Rochelle has the added benefit of offering Amtrak service as well. In addition, New Rochelle offers a vibrant downtown with a wide array of restaurants and shops. It also offers access to the beauty of the nearby Long Island Sound.”
In New Rochelle, Cappelli recently completed construction of One Clinton Park at 26 South Division Street. The multi-family, mixed-use development features 352 apartments in a 28‑story tower with ground-level retail space. Not far away, at Two Clinton Park, Cappelli is also building a 28‑story tower with 390 apartments and ground floor retail space.
Meanwhile, at the Huguenot Complex in New Rochelle, 3THIRTY3 is one of two 28-story towers making up the 435,000-square-foot center. 3THIRTY3 features 285 apartments and a full floor of indoor and outdoor amenities including an indoor swimming pool. Currently under construction, the second 28-story building, with 249 apartments and ground-level retail space, is located directly across the street.
If home buying slows down, the trend toward multi-family, mixed use construction is likely to accelerate. “The market for mixed-use, multi-family development in Westchester is hot and getting hotter. Young professionals who have been priced out of the New York City rental market are discovering that they can live in a building with all the amenities and top quality that you will find in Manhattan at half the cost. Plus, you have easy access to Manhattan via Metro North stations that are an easy walk from their building. We are seeing a greater number of renters who commute to work in Manhattan but choose to live in Westchester. It’s the best of both worlds,” said Cappelli.