White Plains Leads the Way for County’s Office Market
John Jordan | August 2017
WHITE PLAINS—The City of White Plains saw most of the major office leasing transactions in the second quarter, which paced overall activity in Westchester County, according to market reports released recently by a number of major commercial brokerage firms.
Colliers International Group reports the City of White Plains followed a strong first-quarter performance with another in the second. Three out of the top five leases in Westchester were signed in the White Plains CBD, the largest being Sumitomo’s 101,411-square-foot lease at 1 North Lexington Avenue. The brokerage firm notes that the city’s availability rate of 17.8% is the lowest since the third quarter of 2006, resulting in a year-over-year rise of 5.8% in asking lease rates to $33.89-per-square-foot in Downtown White Plains.
Other significant transactions in the county in the second quarter were Danone Co.’s 82,000-sqaure-foot lease at 1 Maple Ave. in White Plains and Ascensia Diabetes’s 65,000-square-foot lease at 100 Summit Lake Drive in Valhalla.
“The official marketing of IBM’s 1-million-square-foot former headquarters in Somers, New York, hurt what would have otherwise been a solid quarter for Westchester’s office market,” said Jeffrey Williams, executive managing director | market leader for Colliers “The quarter ended with 723,799 square feet being leased, which was 26.5% higher than the trailing five-year quarterly average. However, the availability rate still climbed 240 basis points from last quarter to 22.0%.” Owner confidence in the market helped push asking rental rates up 1.9% from last year, to a current $27.90-per-square-foot, the brokerage firm states.
The Northern submarket appeared to have stabilized over the past two years, with the availability rate hovering around 25.0%. However, the rate jumped to 36.4% in the second quarter due to the marketing of IBM’s former headquarters in Somers, which is also dealing with the availability of the PepsiCo complex there as well.
In the Southern submarket, residential developers have flocked to the mini-cities of New Rochelle and Yonkers, among others. Owners of office properties should benefit from their proximity to a fresh talent pool, and the increase of 11.4% in average asking rents since this time last year is proof of their confidence, Colliers states in its report.
Leasing activity in the East I-287 submarket stood at 161,041 square feet, but new availabilities were extremely limited. This dynamic helped push down the availability rate by 60 basis points to 17.0%, the lowest rate since the fourth quarter of 2006. The largest transaction was Milber Makris Plousadis & Seiden leasing 29,573 square feet at 709 Westchester Ave.
A significant moment for the I-287 corridor’s office market will come with the adaptive reuse of two former commercial office buildings at 103 and 105 Corporate Park Drive into multifamily residential use. A groundbreaking for the project to be developed by residential developer Toll Brothers was scheduled on Aug. 15.
The office availability rate in the West I-287 submarket increased by 80 basis points to 24.0% during what Colliers described as a “quiet quarter.” This was due primarily to the marketing of Danone’s former space at 100 Hillside Ave. in Greenburgh.
According to brokerage firm CBRE, Westchester County is trending in a very positive direction for 2017 year-to-date. There has been positive net absorption for the first two quarters of 2017 along with consistent leasing velocity and low availability rates—creating a very optimistic outlook for Westchester County. A majority of the leasing for Westchester Country took place in Class A properties, which saw 324,352 square feet of activity, an uptick from last quarter’s 302,037 square feet. Total leasing velocity was strongest in the CBD/White Plains submarket, which posted 168,816 square feet of activity.
Overall leasing velocity of 349,929 square feet in Westchester County was down slightly from 351,015 square feet recorded in the first quarter of 2017.
More specifically, availability rates across the county are at levels not seen in years. Westchester CBD’s availability rate of 17.7% is the lowest it has been since 2010. Meanwhile, Westchester East’s rate of 16.5% in the second quarter has not been this low in more than 10 years. These markets are representative of the health of the county overall in terms of their location, relative property values and size of the markets, CBRE states in its report.
Commenting on activity in Westchester and neighboring Fairfield County, CT, Robert Caruso, senior managing director of CBRE’s Westchester/Fairfield County operations, says, “Although leasing velocity was down from last quarter, there are a number of bright spots for both Westchester and Fairfield counties. Demand for Class A office space was particularly high and we expect this to continue to drive much of the activity in both of these markets. As the year goes on, we anticipate demand continuing to grow and leasing velocity to increase.”
CBRE reports that Fairfield County’s leasing velocity was down in the second quarter as compared to the previous quarter. However, the Stamford CBD submarket experienced the most leasing activity with 136,989 square feet, followed by the Stamford N/CBD with 62,177 square feet. The county continues to deal with large blocks of available space that have driven up the availability rate in the market, which ticked up just slightly from 24.6% in the first quarter to 25.4% in the second quarter of this year.
At $32.39-per-square foot, asking rents in Fairfield County rose slightly from last quarter’s $31.94-per-square-foot.