Panelists at the Building Owners and Managers Association session held on Thursday admitted that they have some concerns that a slowdown that began in July of this year has been exacerbated somewhat by the terrorist attacks of September 11.
James Fagan, senior managing director of CB Richard Ellis, notes, "This is the best bad market we've had." He added that he believes office space demand will increase in the months ahead. However, for now, he says that brokers are concerned about the lack of office space leasing demand in the Westchester-Fairfield marketplace. "Everyone is walking on egg shells because people are uncertain about where we are going," he says.
Howard Greenberg, a principal of Howard Properties of White Plains, related, "Tenants are not making decisions right now unless they have to."
Kenneth Krasnow, regional managing director of Cushman & Wakefield of Connecticut, says that demand has not fallen off that sharply and that this downturn is not nearly as deep as the one the market experienced in the mid 1980s to early 1990s. He relates that the slogan brokers and developers had in Westchester-Fairfield during the last recession "Stay Alive 'til '95" should not be applied to the current office market. "We are cautiously optimistic about a short-term recovery," he says.
Dean Shapiro, executive director of Insignia/ESG's Westchester/Connecticut office, says, "Demand right now is weak, but I don't think we are going to see any supply bombshells, I think that has shaken out already." He notes that although some corporate office space has been given back in recent times by Texaco and International Paper, he does not expect any further corporate downsizing programs to impact the Westchester market in the near term.
Shapiro recalls that prior office market downturns were in many cases fueled by large givebacks of space by major corporations in the county. He says he is concerned by the fact that the county's bread and butter tenant market "small to medium sized companies" are at least for now staying on the sidelines and postponing real estate decisions until they see what is happening with the economy.
Most but not all brokers, believe the office availability rate in Westchester will go up in the coming quarter. In addition, due to the decline in demand and the job cutbacks that have put a dent in economic growth nationwide, they agree that building owners will become more "tenant friendly" and be more aggressive in securing deals prior to lease expiration.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
