The year 2024 has been particularly challenging for Long Island’s real estate sector, with high-interest rates hovering around 7 percent making the residential market tough. These high rates have led to low inventory and soaring home prices, which in turn have significantly reduced the number of home sales. Potential homebuyers are finding it increasingly difficult to secure affordable mortgages, which has created a challenging business environment. Despite these hurdles, the commercial real estate and retail sectors have showcased resilience with major development projects and crucial deals underscoring the area’s economic strength and investor confidence.
Impact of High-Interest Rates on Residential Real Estate
The high-interest rates in 2024 have had a profound impact on Long Island’s residential real estate market. With rates hovering around 7 percent, potential homebuyers have found it increasingly difficult to secure affordable mortgages. This has led to a decrease in the number of home sales, as many buyers are priced out of the market. The difficulty in securing mortgages has created financial pressure on both buyers and sellers, making it harder for transactions to occur.
Low inventory has further exacerbated the situation, driving home prices even higher. Sellers are hesitant to list their properties, knowing that they might struggle to find a new home within their budget. This creates a vicious cycle where the limited availability of homes forces buyers to pay a premium for desirable locations. Even though some areas of Long Island have seen pockets of activity, the overarching trend has been one of caution and reduced transactions. Buyers and sellers are adjusting to the new economic reality, which has led to a stagnation in the residential market.
Despite these obstacles, there have been a few positive indicators. Some affluent buyers are still willing to enter the market, mainly targeting prime locations and luxury properties. This segment has managed to sustain some activity, though it represents a smaller portion of the market. Real estate agents and brokers are advising clients to exercise patience or consider alternative financing options, hoping that conditions will improve in the future.
Major Development Projects Showcase Resilience
Amidst the challenges in the residential market, Long Island has seen significant progress in major development projects. One of the most notable is the transformation of an 87-acre portion of the former Central Islip campus of the New York Institute of Technology into The Belmont at Eastview. This $300 million project, led by Steel Equities and the Marcus Organization, aims to create a spacious mixed-use community. The first phase of The Belmont at Eastview, which includes 364 apartments and an 18,000-square-foot clubhouse, has already been completed, with a ribbon-cutting ceremony marking its opening.
The upcoming second phase will add 281 rental apartments, 81 for-sale condominiums for people aged 55 and over, 55,000 square feet of new retail space anchored by an 18,000-square-foot grocery store, a three-story, 40,000-square-foot medical office building, and more. This ambitious project reflects confidence in Long Island’s future growth and the potential for creating vibrant, community-centric spaces. The development has garnered attention not only for its scale but also for its vision of integrating residential, commercial, and recreational spaces in a cohesive manner.
Another significant redevelopment is the transformation of the Broadway Commons mall in Hicksville into The Shoppes on Broadway. This $100 million-plus project includes the demolition of a long-shuttered Macy’s store and the interior redesign of about 100,000 square feet of the mall. A 105,000-square-foot big-box store, expected to be occupied by BJ’s Wholesale Club, will be added, featuring gasoline service and electric vehicle charging stations. The plan also aims to create The District with 70,000 square feet of restaurant and entertainment tenants, a rooftop event space, and a large LED screen for movies and sports. These projects exemplify how Long Island’s developers are leveraging existing spaces to create new opportunities for growth and community engagement.
New Retail Openings and Adaptive Reuse
Long Island’s retail sector has also seen notable developments in 2024, indicating a trend toward adaptive reuse of existing properties. One of the key stories is Target’s new store opening in Bridgehampton Commons. This store will replace the last full-size Kmart in the continental U.S., which closed in October 2024. Target will occupy an 89,935-square-foot space, although it must still go through the permitting process, and is expected to open in late 2025 or early 2026. This development is significant as it breathes new life into a space that had been vacant, demonstrating the potential for repurposing older retail properties to meet contemporary consumer needs.
Another exclusive report revealed Hudson Valley-based Ready Coffee’s acquisition of 10 former Dairy Barn locations on Long Island. Ready Coffee, a drive-thru chain offering various beverages, opened its first location in Baldwin, with two more in Glen Cove and Lynbrook set to open soon. These developments highlight the growing trend of repurposing older structures to meet current demands. By converting former Dairy Barn locations into modern drive-thru coffee spots, Ready Coffee is capitalizing on the existing infrastructure to expand its footprint on Long Island.
This approach not only revitalizes unused spaces but also aligns with consumer preferences for convenience and quick service. The adaptive reuse of existing properties provides an efficient way to address market needs without the lengthy process of new construction. It’s a trend that benefits both developers and the local communities by making better use of existing assets. The new retail openings and adaptive reuse of properties thus represent a positive shift towards flexibility and innovation in Long Island’s retail sector.
Legal Challenges and Development-Related Lawsuits
The year 2024 has also seen several development-related lawsuits, serving as a reminder of the complexities involved in large-scale real estate ventures. One notable case involves former New York Islander Patrick LaFontaine and business partner Steve D’Iorio, who filed a lawsuit after being excluded from the proposed $3 billion Midway Crossing project. The lawsuit claims unjust enrichment and seeks restitution for services provided, with LaFontaine’s Tide Line LLC seeking over $1.3 million and D’Iorio demanding more than $1.07 million. This case underscores the contentious nature of major development projects, where competing interests and contractual disputes can lead to significant legal battles.
In another long-running dispute, developers of the $1.3 billion Belmont Park project were granted a six-month extension to fulfill their promise of building a community center in Elmont. The agreement originally stipulated a five-year deadline to deliver the 10,000-square-foot community space or pay a $5 million penalty. While the deadline passed in November 2023, the extension reflects ongoing efforts by Empire State Development (ESD) and New York Arena Partners (NYAP) to meet development goals despite facing legal and logistical challenges.
These legal challenges highlight the intricate and often contentious nature of real estate development on Long Island. Developers must navigate a maze of regulations, community expectations, and financial constraints. While legal disputes can delay progress, they also illustrate the commitment of various stakeholders to see projects through to completion. The Belmont Park and Midway Crossing cases serve as examples of the high stakes and complexities involved in bringing large-scale developments to fruition.
Trends in Mixed-Use Developments and Community-Centric Spaces
The year 2024 has been tough for Long Island’s real estate market, particularly due to the high-interest rates stuck at around 7 percent. These elevated rates have resulted in a tight inventory and skyrocketing home prices, consequently leading to a significant drop in home sales. Potential homebuyers are struggling more than ever to obtain affordable mortgages, creating a challenging atmosphere for the residential sector. However, despite these formidable obstacles, the commercial real estate and retail sectors have demonstrated remarkable resilience. This strength is evidenced by major development projects and pivotal deals that highlight the area’s economic robustness and maintain investor confidence. The juxtaposition of the struggling residential market against the thriving commercial sector paints a complex picture of Long Island’s overall real estate landscape. While homebuyers face significant hurdles, the commercial space’s progress offers a silver lining, suggesting that economic activity and investment opportunities continue to foster growth and stability in the region.