Westchester vacancy down for first time since 1990.
According to the Rostenberg-Doern 1995 Corporate Real Estate Report, more than 1.1 million square feet of office space was absorbed in Westchester in 1994, a complete reversal from 1993 when the county suffered a negative absorption of 1.25 million square feet. Westchester's office vacancy rate for 1994 was 22.3 percent, down from 26.9 percent a year ago. This is the first time the county's vacancy rate declined since 1990.
Four of the five market areas surveyed in the county reported declines in vacancy rates, and four of the five markets also showed positive absorption. Downtown White Plains, which had been adversely affected by corporate downsizings for the past several years, gained ground in 1994. The city's vacancy rate fell from 35 to 30.6 percent, a 4.4 percentage point improvement in occupied space.
The Westchester office market benefitted from two major corporate relocations in 1994: MasterCard International's announced move from Manhattan to Purchase and Ciba Corp.'s scheduled relocation from Ardsley to Tarrytown. Both moves accounted for more than 700,000 square feet of absorbed space and helped to reaffirm Westchester County's prominence as a major corporate office location.
While much of the attention focused on MasterCard and Ciba, there were many mid-sized lease transactions of note in 1994. Companies making significant commitments to this market included Malcolm Prinie, Xerox and Nextel. Relocations from New York City included L.K. Comstock, Candie's and Elof Hansson.
"We anticipate that the recovery will continue at a steady pace. There are several factors to support a sustainable rebound. Westchester County office rents remain below those offered in Manhattan or Fairfield County. Secondly, the inventory of quality office space in Westchester, particularly well-located Class A buildings, is now owned by experienced institutional ownership with the financial resources and commitment required to meet the demand for the Westchester marketplace," said John H. Rostenberg, principal of Rostenberg-Doern Company, Inc. "While further downsizings by major space users, such as IBM and NYNEX, cannot be ruled out entirely, the county may also see more relocations from New York City by larger companies," Rostenberg added.
"With no new office construction under way, a trend that has continued in Westchester for the past five years, companies are turning to the adaptive re-use of existing office buildings," Rostenberg said. "Landlords are expending capital for basic upgrades of space and, in some instances, are committing to the complete redevelopment of buildings. This trend is particularly evident in the office parks along the Cross Westchester Expressway."
Meanwhile, Fairfield County's office market continued to build on a strong recovery, with more than 2 million square feet of space absorbed for the year and a county-wide vacancy rate of 17.2 percent. The combined absorption for the Westchester-Fairfield region totaled more than 3.3 million square feet, compared to a negative absorption of 121,000 square feet in 1993. The two-county region's vacancy rate fell from 24.4 to 19.4 percent.
"After several tough years of corporate downsizings, the Westchester-Fairfield region office market turned the corner in 1994. In 1995, we expect to see continued strong leasing activity, moderately higher rental rates and renewed construction activity, especially build-to-suitprojects," Rostenberg said.
The survey of Westchester County's five market areas showed:
Westchester County CBD: The office market in downtown White Plains rebounded strongly in 1994. The city's vacancy rate, which hit a record 35 percent in 1993, fell to 30.6 percent. More than 212,000 square feet of space was absorbed, a sharp reversal from a negative absorption of nearly 400,000 square feet in 1993. The market for office space in the 2,000 to 10,000 square-foot range is very tight. At year's end, AT&T purchased 360 Hamilton Avenue from The Prudential Realty Group. AT&T has no current plans to occupy the space but has committed to infrastructural renovations that ultimately will improve the building's marketability. The completion in 1995 of the new federal courthouse and the new 850,000 square-foot mall will further energize the city's overall economy.
MAJOR DEALS: Datalan, David Worby, P.C., Fortistar, L.K. Comstock, N.Y. Court of Claims, Nextel, Pilkington & Leggett, Plunken & Jaffe, Thatcher Proffit and Westchester County Appellate and Surrogate Courts.
Westchester County East: The eastern half of the county, which includes Harrison, Purchase and Rye, reported approximately 527,000 square feet of absorption and a vacancy rate of 20.1 percent, which is down a full six points from a year ago. MasterCard's relocation from Manhattan to approximately 433,000 square feet in the former IBM building in Purchase re-established the Platinum Mile's reputation as a premier corporate office market. In another important transaction, Malcolm Prinie signed a long-term lease for 82,000 square feet in Harrison.
Westchester County West: Ciba Corp.'s planned relocation of its head-quarters from Ardsley to 275,000 square feet of leased space on Route 119 in Tarrytown provided a major boost to the western half of the county. Absorption for the year totaled more than 335,000 square feet, and the vacancy rate fell to 14.5 percent, down almost 10 points from 1993.
Westchester County North: The county's northern office market, which includes Mount Pleasant, Mount Kisco and Yorktown, ended the year on a positive note, with absorption of nearly 77,000 square feet and a vacancy rate of 24.7 percent, down from 26.1 percent in 1993. The Bank of New York's lease of 138,000 square feet in Pleasantville was the largest deal of the year in this market. This market was hurt by the vacating of blocks of space by IBM in Ossining and by First Fidelity in Hawthorne.
MAJOR DEALS: Bank of New York, BDO Seidman, Merrill Lynch, Northern Westchester Center for the Arts, Smith Barney Shearson and The Travelers Company.
Westchester South: Westchester's smallest office market, which includes Yonkers, Mount Vernon and New Rochelle, reported mixed results in 1994. Absorption was generally flat while the vacancy rate rose slightly from 17.7 percent in 1993 to 18 percent.
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|Title Annotation:||Westchester County, New York, office space space vacancy|
|Publication:||Real Estate Weekly|
|Date:||Jan 18, 1995|
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