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Photographer: Rob Stephenson for Bloomberg Businessweek Photographer: Rob Stephenson for Bloomberg Businessweek

A literal arms race is heating up between two suburbs north of Manhattan. Ax-throwing bars are in the works at New Rochelle and Yonkers, both of which see the edgy pubs as a means to attract millennials away from New York City. The two biggest towns in Westchester County are betting on luring affluent urbanites who like their bars and bagels close but are sick of feeling poor in the Big Apple. If they succeed in getting the Gothamites to move, however, they risk driving rents too high for locals.

New Rochelle and Yonkers are selling location—a half-hour train ride from Midtown Manhattan, with rents at a fraction of the cost—and preparing for an influx of city exiles by building apartment towers outfitted with luxury amenities such as dog-washing stations and rooftop fire pits. The way they see it, every New York City rent increase means more potential Westchester residents.

“Let them raise rents—please keep on making it expensive, because then people are going to have to make a choice, right?” says Luiz Aragon, the development commissioner of New Rochelle, which has a population of almost 79,000. Yonkers’s is a bit shy of 200,000. Both towns are struggling to turn around their fortunes from damage wrought by the hollowing out of their downtowns after shopping malls colonized the suburbs in the 1970s and ’80s. Now the municipalities are encouraging development with long-term tax breaks and speedy permit approvals.

14 LeCount Place, a 27-floor mixed-use development under construction in New Rochelle. Photographer: Rob Stephenson for Bloomberg Businessweek

Westchester’s property taxes are already among the nation’s highest. So the county is on a push to boost population density to raise revenue for its bulging public school budgets. Its building boom extends from the commercial hub of White Plains, to working-class enclaves such as Port Chester and Mount Vernon, to bedroom communities such as Chappaqua, where Bill and Hillary Clinton have a house. But it’s most intense in these two populous towns just north of New York City.

Choudhary Chilukuri, a 34-year-old graduate student at Mount Sinai medical school, says he and his wife only considered Yonkers because they were so disappointed with what they could afford in Manhattan. In June, the couple moved into a one-bedroom unit in the new Apex Hudson Riverfront tower in Yonkers, which has views of the soaring Palisades cliffs. Their rent is $2,100 a month, and parking is just $100 a month. “The apartment is spacious, it’s so calming here,” he says. “If I want to go to a restaurant or something and try a new cuisine, I'll go to Manhattan instead of searching for a restaurant in Yonkers. The train is only five minutes away,” says Chilukuri, who adds that the building is quickly filling up, primarily with young professionals.

New Rochelle, which was the setting for the 1960s sitcom The Dick Van Dyke Show, is making a play for the same demographic, with a pipeline of 6,300 luxury rental units in the works, street Wi-Fi kiosks, benches that double as phone charging stations, and complimentary Uber-style taxis. New businesses include the Encore Esports video game tournament lounge and the Bad Axe Throwing bar, set to open this winter. “Six thousand units is a lot for New Rochelle, but it’s a drop in the bucket for a metropolitan area with 20 million people,” says Mayor Noam Bramson. “We’re not anticipating everyone will pick up and leave Brooklyn and Manhattan, but a small fraction is enough.”

The 39-story Skyline New Rochelle. Photographer: Rob Stephenson for Bloomberg Businessweek

Downtowns focused around train stations mean fewer cars and more foot traffic for hip restaurants and stores. A growing population of well-educated, mostly single workers could bolster the tax base without burdening the schools with more children, as well as attract new employers.

But building so late in the economic cycle—America’s record-long expansion is now in its 11th year—has obvious risks. A decade ago, cities in Westchester County including Yonkers and New Rochelle also added units at a fast pace. Then the bottom fell out of the market. On the flip side, if demand for the luxury rentals does materialize, it could drive up housing costs in the county’s last remaining affordable towns, says Lynn McCormick, an associate professor of urban planning at Hunter College who lives in New Rochelle. “We’re hyperdeveloping areas around transit hubs, hoping to attract people with money,” McCormick says. “It’s the gentrification story all over again. The inner cities are tapped out, so now we’re going to the suburbs.”

In New Rochelle, Aragon sits at a boardroom table in his crisp blue shirt and yellow tie looking more like the head of a big advertising firm than the development commissioner of a small city. His office walls are adorned with a dozen gleaming shovels from groundbreaking ceremonies. The hard hats lining the windowsill are branded with the names of developers, including RXR Realty, which helped come up with the vision for an approximately 300-acre project that includes three luxury buildings that are already welcoming renters. An advertisement set on an easel features a digital rendering of the skyline as it will look five years from now, every window gleaming in the evening sky. “The New New Rochelle,” it reads. “Your City Outside the City.”

A future hotel in New Rochelle. Photographer: Rob Stephenson for Bloomberg Businessweek

While he’s overseeing the building of a revitalized downtown that will take a half-dozen years to fully materialize, Aragon says he’s also building a brand. He wants new residents—and the ones who stuck with New Rochelle through its ups and downs—to look past the empty storefronts, pawnshops, and dollar stores. He points instead to the new, free on-demand electric shuttle and the Wi-Fi kiosks that he chose because they’re identical to the ones in New York. “The important thing is creating the thread between Manhattan and New Rochelle so we are continuing the experience,” he says.

Walk down Division Street, New Rochelle’s budding restaurant row, and another vision of the town’s future appears on a wall just down the street from the Wooden Spoon, an eatery that serves up what it calls “hipster” mac and cheese with truffle oil. It’s a mural by U.K. street artist Dan Kitchener that depicts city life in a swirl of color, a pack of faceless silhouettes crossing a busy street in the rain, some without umbrellas but with earbuds firmly planted.

Beth Acocella, a New Rochelle native and sales agent at the 110-unit Millennia rental tower, says she hopes young New Yorkers arrive, but suggests the city should put equal effort into drawing older locals who are downsizing out of single-family homes. The Millennia will feature an indoor putting green, free internet, and concierge services such as dog walking. Rents will range from $2,150 for a studio to $3,800 for the most expensive two-bedroom units. “I want all this new development to work. We want more people in the city who will go to the wine bar and walk their dog in the dog park,” Acocella says. “The risk could be too much inventory.”

A 14-story residential tower is going up on the lot that once housed New Rochelle’s daily paper, the Standard-Star. Photographer: Rob Stephenson for Bloomberg Businessweek

Yonkers, the bigger of the two cities, has about 5,900 luxury apartments under construction, street corner artwork, and a slogan that’s a nod to the demographic it hopes will lift the sagging tax base: “Generation Yonkers.” The recent talk of recession has only spurred Mayor Mike Spano to move more quickly with a revitalization project that’s already showing some early signs of success. There’s a Brooklyn-style bagel shop and a gym coming. And Lions Gate Entertainment Corp., drawn by federal tax breaks for investing in lower-income communities, is planning a $100 million-plus production facility in the heart of downtown.

Both Spano and New Rochelle’s Bramson say they’re working to limit the impact of gentrification by creating hundreds of units that would be affordable to the local population. “There’s two options here: We stay the way we were, in which case we all lose out,” Spano says. “Or, we go out of our way to take advantage of the economics. Bring the millennials here, get the baby boomers that are empty-nesters now who want to live with the millennials, and get that type of activity in this community. We’re not displacing anyone, because 90% of everything that’s been built has been built on vacant property.”

But Cynthia Clarke, a 63-year-old retiree living blocks from Yonkers’s new waterfront on a fixed income of $840 a month, is worried. The cost of living is already rising, she says, as she pushes a cart of groceries home after a visit to the downtown ShopRite. And she’s concerned the owner of her two-bedroom apartment will modernize the building for the next wave. “It’s like they’re trying to push everybody out,” she says. “There’s really nowhere to go.”



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