Hudson Valley emerges from city's shadow.

New York's Hudson Valley is no longer living in Manhattan's shadow, according to a new report released by State Comptroller Alan Hevesi.

"The Hudson Valley's economy is in great shape and is growing rapidly," Hevesi said. "Incomes are rising, unemployment rates are falling and, over the last decade, the region's economy has become less dependent on New York City, even expanding during the last recession when the city's economy contracted."

The area--which includes Dutches, Orange, Putman, Rockland, Sullivan, Ulster and Westchester counties--has a vibrant economy that is the strongest of any region within New York State. It enjoys the fastest employment growth in the state, an expanding tourism sector and a high concentration of jobs in the well-paying professional and business sector.

Among the plethora of boom towns, Westchester in particular has become a major business center in its own right, with both White Plains and New Rochelle bidding for the top spot.

Glen Walsh, senior director of Cushman & Wakefield in Westchester, said, "The city has done a masterful job of transforming White Plains. People now want to be there and suburbanites are even looking to move back to White Plains."

Developers Louis Cappelli and Donald Trump have been credited with driving the uturn, creating a City Center residential and retail mix and apartment and retail complexes in both White Plains and New Rochelle over the past few years.

Jeff Newman, executive vice president at W&M Properties, said the developers have helped create a 24/7 community there and given renewed vigor to the office leasing market.

"It's now easier for owners to attract tenants and for them to attract employees who will want to live in White Plains where they can also dine and shop. Every sector is benefiting."

Added Walsh, "We are projecting [office] vacancy rates could be in the single digits by the year's end--we haven't seen vacancy rates of that nature in nearly 20 years."

While residential and retail developments have been red hot in White Plains, there has not been a surge in new office building. According to AI Gutierrez, first vice president at CBRE in Westchester, "Office activity has been good and consistent over the last two years and there has been repositioning of existing vacant large properties. As we see increased activity in New York City and diminished blocks of space there, perhaps there will be justification for new Westchester County office developments. There are some great sites out there, but we're not there just yet."

In New Rochelle, Trump and Cappelli have made their mark also, with Trump Plaza going up across the street from the 1.2 million square feet New Roc City retail complex, built by Cappelli.

"What they're trying to do to New Rochelle is something similar to White Plains," said Scott Lifschultz, executive vice president, GVA Williams of Connecticut.

"New Rochelle has a long way to go, but it has the potential, with its population base and access to I95, to be successful."

Retail broker Andrew Pittell, of Manhattan based Andrew Pittell Real Estate, said the Westchester market has definitely popped onto the radar of major firms. "A lot of major [retail] tenants want to be there," he said.

"Income levels there can support a lot of the better retailers, there is an abundance of sophisticated shoppers, family oriented entertainment, places to go. They have created pedestrian friendly town centers that make the shopping experience leisurely and comfortable.

"I think we will see a lot more of the type of development that's going on in White Plains and New Rochelle spread to other downtown areas of the Hudson Valley."

Indeed, with Hudson Valley's population rising by 3-4% annually, retail is naturally going to follow it, according to Thomas Collins, president of Duchess County firm, Commercial Associates.

"Retail land is selling up in the 300,000+ acre range," said Collins. "It's prime retail land and rents are $18-$25 psf range."

The city's of Rye and Yonkers are also expected to emerge as major destinations as the development trneds continue.

Indeed, those suburban city centers are definitely where the smart money is heading, according to Joe Apicella, senior vice president for development at Cappelli.

"We are going to continue to look at retail opportunities in the cities, particularly New Rochelle and White Plains," said Apicella. "As long as the dollar remains strong and inflation is in check, I think we will continue to see national retailers, credit worthy tenants, wanting to be in those suburban centers."