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Corporate downsizings hamper Westchester office market.

Rocked by several major corporate downsizings, the Westchester Westchester is the name of some places in the United States of America:
  • Westchester, Los Angeles, California
  • Westchester, Florida
  • Westchester, Illinois
  • Westchester County, New York
  • The Westchester, a shopping mall in White Plains, New York
 County office market finished the third quarter of 1998 with significantly more space vacated than leased, according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 the Insignia/ESG Third Quarter Office Market Report.

Net absorption totaled a negative 697,147 square feet for the third quarter, a major reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its  from 84,574 square feet of positive absorption in the same period a year ago. Year-to-date Year-to-date (YTD)

The period beginning at the start of the calendar year up to the current date.
, however, absorption remained a positive 97,429 square feet. More than 450,000 square feet of space was leased during the past three months, 3 percent below the leasing activity of the third quarter of 1997. However, leasing activity year-to-date totaled approximately 1.8 million square feet, 28 percent higher than the level reached a year ago at the same time.

The third-quarter county-wide availability rate was 16.6 percent, up more than two percentage points from three months ago, but essentially unchanged from the same period a year ago. The Westchester North segment had the county's lowest availability rate at 6.4 percent, while downtown White Plains had the highest at 30.6 percent.

The county-wide average asking rental rate for Class A and B space was $23.08 per square foot, up $2.09 from the third quarter of 1997. Average asking rental rates ranged from $25.60 per square foot in the Westchester East segment to $16.48 per square foot in the Westchester South segment.

All five market segments surveyed reported negative absorption for the third quarter, with the Westchester East segment the hardest hit at negative 412,776 square feet. Among the companies returning space to the market in the third quarter were Oxford Health Plans in White Plains (296,032 square feet); Texaco in Harrison Harrison, town (1990 pop. 13,425), Hudson co., NE N.J., an industrial suburb on the Passaic River opposite Newark; inc. 1869. The town has several foundries. Its manufactures include plastics, paperboard, and metal products.  (220,000 square feet); IBM (International Business Machines Corporation, Armonk, NY, The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries)  in Harrison (110,000 square feet); Hitachi Hitachi (hētä`chē), city (1990 pop. 202,141), Ibaraki prefecture, E central Honshu, Japan, on the Kashima Sea. The city is a leading producer of Japan's electrical equipment.  in Tarrytown Tarrytown (târ`ētoun), village (1990 pop. 10,739), Westchester co., SE N.Y., a residential suburb of New York City, on the E bank of the Hudson opposite Nyack; settled in the 17th cent. by the Dutch, inc. 1870.  (57,000 square feet); Entex in Rye Brook (46,530 square feet); and Nine West Group in White Plains (45,000 square feet).

In addition, several large unoccupied office buildings were renovated and upgraded to Class B status, further increasing the inventory of available space. Among these buildings were 75 South Broadway Broadway, famous thoroughfare in New York City. It extends from Bowling Green near the foot of Manhattan island N to 262d St. in the Bronx. Throughout its length Broadway is chiefly a commercial street.  in White Plains (102,000 square feet); 100 Grasslands Road in Elmsford (45,000 square feet) and 101 East Post Road in White Plains (40,000 square feet).

"Once again, corporate downsizings have stalled stall 1  
1. A compartment for one domestic animal in a barn or shed.

a. A booth, cubicle, or stand used by a vendor, as at a market.

 an otherwise healthy office market in Westchester County," said Michael Michael, archangel
Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence.
 A. Klein Klein , Melanie 1882-1960.

Austrian-born British psychoanalyst who first introduced play therapy and was the first to use psychoanalysis to treat young children.
, executive director of Insignia/ESG's Westchester-Connecticut office. "While the current cutbacks are less severe than in previous years and involve a more diverse tenant base, there are fewer major lease transactions to help offset the downturn Downturn

The transition point between a rising, expanding economy to a falling, contracting one.


A decline in security prices or economic activity following a period of rising or stable prices or activity.
. In fact, with the exception of renewals, almost two years have passed since Westchester has seen a lease transaction measuring 100,000 square feet or more."

The largest lease transaction in the third quarter was Westcon, Inc.'s 66,082 square-foot lease at 520 White Plains Road in Tarrytown. Other significant leases in the third quarter included IBM's 41,178 square-foot expansion lease at 44 South Broadway in White Plains and AMBI's 22,670 square-foot lease at 4 Manhattanville Road in Purchase.

Klein said the recent downsizings are not driven by the slumping Slumping is a categorical description of an area of techniques for the forming of glass through the use of heating glass to the point where it becomes plastic. It is generally formed by the force of gravity.  stock market, but rather are the result of industry-specific problems. "Although the third-quarter results are disappointing, the office market tends to finish the year with a strong fourth quarter," he said.

A survey of Westchester County's five market segments showed:

Westchester County Central Business District

Downtown White Plains ended the third quarter with a negative net absorption of 197,068 square feet. As a result of the volume of returned space, the segment's availability rate rose more than four percentage points from mid-year, although this number is still down slightly from 31.1 percent in the third quarter of 1997. Leasing activity for the quarter totaled 126,362 square feet, a 19 percent decline from the total amount leased in the third quarter of 1997. However, year-to-date leasing activity totaled 321,318 square feet, slightly ahead of the 306,486 square feet of space leased in the first nine months of 1997. Major deals included Community Care Network, IBM (expansion), Light House International and Optum Group.

Westchester County East

Due primarily to downsizings by Texaco and IBM, the Westchester East segment accounted for nearly 60 percent of the total negative absorption in the county during the third quarter. The segment's availability rate jumped nearly four percentage points from three months ago to 17.5 percent, but is still a full percentage point lower than a year ago. More than 91,000 square feet was leased during the third quarter, off 40 percent from the levels achieved in the third quarter of 1997. Leasing activity year-to-date totaled 713,927 square feet, a 43 percent increase from leasing activity in the first nine months of 1997. Major deals included AMBI AMBI Associação Médica Brasileira Iridologia  and Professional Risk Managers, Inc.

Westchester County West

The Westchester West segment led the market in leasing activity in the third quarter with 174,321 square feet of space leased. A total of 379,825 square feet was leased in the first nine months of 1998, a 91 percent increase over 1997's third-quarter year-to-date amount. The submarket's absorption, however, was a negative 40,525 square feet for the quarter and the availability rate was 14.7 percent, up more than four percentage points from the same time a year ago. Major deals included Amera Health and Westcon, Inc.

Westchester County North

The availability rate in the Westchester North segment was 6.4 percent, the lowest rate In the county and down more than two percentage points from the third quarter of 1997. Leasing activity for the quarter totaled 48,835 square feet, a 33 percent decline from the third quarter last year, while absorption was a negative 38,375 square feet. Absorption year-to-date totaled 204,261 square feet. Aconda Theupeutic accounted for the only major deal.

Westchester County South

The third quarter in this segment was characterized char·ac·ter·ize  
tr.v. character·ized, character·iz·ing, character·iz·es
1. To describe the qualities or peculiarities of: characterized the warden as ruthless.

 by a 71 percent drop in leasing activity from last year and slightly negative absorption. The availability rate for the quarter was 13.3 percent, an increase of nearly two percentage points from the third quarter of 1997. Year-to-date, only 53,263 square feet of space was leased, compared to 201,882 square feet leased for the first nine months of 1997. There were no significant ease transactions to report in the third quarter.

The Insignia/ESG Third Quarter Office Market Report surveyed 290 multi-tenant In the Software as a Service (SaaS) software architecture, multi-tenant refers to the ability of the hosting site to support multiple organizations ("tenants") at the same time.

Multi-tenancy is a key feature of a true SaaS architecture.
 Class A and B buildings in Westchester County. Government-owned and-occupied buildings, medical office buildings and buildings under 20,000 square feet were excluded.
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Title Annotation:Westchester County, New York
Publication:Real Estate Weekly
Article Type:Industry Overview
Date:Oct 21, 1998
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