It was a huge week in the history of Sullivan County. After a forty year quest for a casino meant to jump-start the economy of one of New York's most ailing counties, the area was delivered an early Christmas gift with the recommendation by the Gaming Commission Location Board that Sullivan be granted a license, and equally importantly, that Orange County not be granted any. As previously mentioned here, that possibility would have likely scuppered the potential for success of a Catskills casino, because how many people would be willing to pass a casino 45 minutes from NYC, to travel another hour north to a different facility. The "one and none" recommendation was an absolute score for Sullivan County.
(As an aside, let's call it a resort now, shall we? The casino is simply one component of a huge destination resort. For many, the reference to "casino" detracts, not adds, to the tone, and resort sounds like something we can all get excited about.)
But what does this all mean, especially for real estate? The scale of this project cannot be underestimated: The annual budget for the county is $202 million. The investment to build Montreign (the casino and hotel) and Adelaar (the water park and entertainment village) will likely top $1 billion. And the mandated timeframe for completion of the hotel and casino is two years from the final sign-off from Albany, which should come in the next couple of months. Imagine $700 million being spent in a 24-month period in this county of about 77,000 people. And this doesn't count the myriad businesses already eager to set up shop in the county and cash in on some of the significant earning potential surrounding the sudden influx of construction workers, then tourists.
PHASE I CHANGE TO LOCAL REAL ESTATE: THE RENTAL MARKET
We know this project means thousands of jobs, first the trades to build it (mostly union), then the employees to manage and operate the project. There is not enough local population to meet the hiring needs for construction, so they will come in from neighboring counties and will require housing. This brings up the first phase of the resort's impact on real estate. The inventory of rental properties (as opposed to short-term vacation rentals, like our sister company Red Cottage Inc.), has been scant and fairly down-market. Where there is significant rental stock, Section 8 housing often dominates. So with a sudden spike in middle-range rental housing required, it is possible we will see some landlords improve properties and target this more lucrative new market and their attractive per diems. This will presumably raise up the more down-at-heel areas as landlords upgrade their properties and cater to a more diverse rental pool.
I would expect that multi-family properties within 30 minutes of the resort should be worth substantially more today than they were last Tuesday. And it stands to reason that the same holds for most of the businesses that will see a transformation of their levels of commerce with the jump in local population during the building phase, like restaurants, markets, gas stations, big box stores, etc.
PHASE II CHANGE TO LOCAL REAL ESTATE: THE FULL-TIME HOMEOWNER MARKET
The second phase occurs when the tradespeople leave and the full- and part-time employees start to staff and operate the resort. Figure the casino and hotel should largely be complete by spring of 2017. Again this will solidify and likely further enhance the rental market that grows out of phase one. But it will also stimulate the yearround homeowner market by creating demand for the middle-range home purchases, say, in the upper $200,000s to lower $400,000s. These will likely be double-income families and management who have either been living locally and have seen their earning power improve, or employees who are new to the area and are seeking a home purchase for the first time in the county. This new wave of homebuyers should significantly change the value profile of real estate in Sullivan County.
Similarly, indirect improved prosperity will also drive this trend. New business activities should flourish around this project and will themselves attract investment, employment and increased housing demand, all pushing forward the real estate market in the locality.
PHASE III CHANGE TO LOCAL REAL ESTATE: THE SECOND HOME MARKET
My primary focus at Country House Realty is the second home market. Not long ago I mentioned the prospect of the "casino" while discussing various options in a buyer's search for a $1m+ country property. The response was quick and clear, she did not want to be anywhere near such a thing. And I get it. I, too, was against a casino originally, before I had a more thorough understanding of all the amenities that will be available to guests and to us local residents, as well as all the much-needed shot in the arm that the local schools and government would enjoy from the resultant taxes.
The reality is that Sullivan County's amenities have in recent decades (since the demise of the Borscht Belt when the county was THE happening place) been very skewed to outdoor amenities, an area in which we are so fortunate to excel. Think fly fishing, hiking, canoeing, and just good old unspoiled scenery. There is a handful of good restaurants, and slowly there are towns that are becoming what I would call "hubs", which have enough retail and appeal that you would want to park and spend some time there. Among those towns are: Callicoon, Livingston Manor, and Narrowsburg.
But comparatively, Sullivan has suffered from a lack of "indoor" amenities, for lack of a better description, particularly yearround offerings, as many businesses go quiet during the winter months. Ulster County's property fetches a premium to Sullivan, and many second home buyers are attracted by the amenities (eateries, shops, galleries, live entertainment), along with a greater number of high-quality housing opportunities. The economic activity generated by Montreign and Adelaar promises to bring Sullivan more in line with its neighbors. It will stimulate towns by raising average incomes, increasing the viability of new businesses and services throughout the county, but also, in one fell swoop, provide dining, shopping and entertainment options, thus improving quality of life for those of us who live here, and who choose to spend weekends and vacations here. There will be 200,000 square feet of retail shopping, dining, live entertainment venues, a multi-plex cinema (don't underestimate how excited I am to be able to go to the movies without driving an hour!), spas, salons, and more.
So my take is that Sullivan County's property values improved on Wednesday...in theory. It will take time for the market to bake in the premiums for the various sectors, with rental properties presumably being the most immediate beneficiaries. 2015 should start to see some inching up in the for sale markets by speculators and perhaps a small group of initial project management; In 2016, project-related employee purchases could drive the for sale market. In 2017 and beyond, if all goes smoothly, I think we'll see more metropolitan buyers choosing second homes in Sullivan County as a magnificent place where they can revel in its memorable scenery, and luxuriate in its many and varied new amenities.