CB Richard Ellis reports that the second quarter office vacancy rate stands at 11%, up every so slightly from the 10.9% rate recorded at the end of the first quarter of this year. The Downtown White Plains office market's rate remained relatively flat as well. According to CB Richard Ellis, the rate for Downtown totals 15% at the end of the second quarter, up from the 14.3% rate posted after the first three months of 2001.
While most submarkets experienced a slight increase in their respective office vacancy rates, Southeast Westchester saw its rate drop from 5.9% at the end of the first quarter to 5.3% in the second quarter. The Western I-287 sector had a drop from 13.1% to 12.1% for the same period and the Southeast Corridor of the county had its rate fall from 8.3% to 6.6%.
Paul Hoffmann, vice president of CB Richard Ellis, says, "Clearly the demand has plateaued and a good number of companies have deferred making decisions thinking that things may be improving in the future."
However, he adds that the time to strike a deal that would be cost beneficial may be quickly running out. Hoffmann says that when the New York City commercial market firms up once again, corporations will look to Westchester County as an alternative to the high prices and tight market conditions in Manhattan.
Hoffmann predicts Westchester County will also capture spill-over activity from neighboring Fairfield County, CT, which is also experiencing tight market conditions. The brokerage firm reports the countywide office vacancy rate there has risen from 7% at the end of March to 9.1% at the end of the second quarter. Asking rents in Fairfield County, which dropped slightly in the past few months, are still significantly higher than what Westchester property owners are charging.
The overall countywide average asking rent in Westchester is $26.55 per sf, down pennies from the $26.88 rate posted three months previous. The countywide rate in Fairfield County now stands at $31.38 per sf. When regional office market conditions improve, perhaps sometime in the third quarter, companies that were studying Westchester could see "a relatively quick spiking of rents" in the county, Hoffmann predicts.
He notes that the national economic downturn has taken its toll on activity in Westchester County. "Demand has slowed down. The pace and velocity of leasing activity has also slowed," he says.
Hoffmann adds that he is hopeful that two recent deals first reported on GlobeSt.com: Austin Nichols relocation from New York City to 55,000 sf of space at 777 Westchester Ave., and news that a Connecticut hedge fund will lease 55,000 sf of space at 900 King St., are signs that New York City and Fairfield, CT firms are finding Westchester a viable option.
Noting that the Westchester County office market is still strong, he says, "I think that if we didn't have the pause in the economy we would have conducted a lot more activity (in the second quarter)."
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
