The report states that businesses are placing sublease space on the market for a variety of reasons such as rent reduction, consolidation and relocation. The total of available office space inventory for the second quarter stood at approximately four million sf. Grubb & Ellis officials say that sublease space accounts for 14.5% of that total. By contrast, for the two years prior, only 8.5% to 9.5% of available inventory was sublease space, they say.
In the last three months, office availabilities outpaced leasing activity in Downtown White Plains. The Grubb & Elllis report notes that the White Plains CBD showed an increase in availability of 1.3%, placing it at 19.3% at the end of the second quarter--the same rate posted at year-end 2000.
Asking rates in Downtown White Plains dropped about $1 per sf from the first quarter to $28.13. Grubb & Ellis officials say that the rent reduction is reflects the fact that tenants are leasing "top tier space" and leaving a larger percentage of lower-cost space on the market, causing the average cost to weigh toward the lower asking rents. Confident in the excellent urban market, property owners are holding rents steady, they say.
Kim Mowers, senior vice president of Grubb & Ellis' Stamford office, points to the numerous successful building repositioning campaigns by owners in Westchester County as a sign of the market's overall strength. He singled out a number of buildings that were vacant single-tenanted buildings that are now vibrant multi-tenanted properties.
For example, Mowers notes that the 380,000 sf Reckson Metro Center (360 Hamilton Ave.) is now 97% leased; MetLife's 445 Hamilton Ave., 320,000 sf, is 37% leased; 1311 Mamaroneck Ave., 300,000 sf, is 100% leased; and 333 Westchester Ave., 600,000 sf, is 30% leased.
"The diversity of businesses that occupy these buildings, and the county in general, add to the strength of the market," Mowers says. "While technology business growth was strong, financial services, insurance and business services have positively impacted the county."
Patrick Colwell, senior managing director of Grubb & Ellis' Investment Services Group, adds that Westchester County will likely continue to hold its own despite the slowdown in activity. He notes that in years past, the market would get hammered by a major office downsizing program during economic downturns. While he acknowledges that some sublease space has come back on the market recently, no major blocks of space have been made available.
Colwell says, "We don't see any major blocks of space coming on the sublease market in the near future. Therefore, we think (office vacancy) rates will remain stable."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
