The brokerage firm in its first quarter 2002 office market report for Westchester County states that the region's office availability rates have improved, due at least in some part to Morgan Stanley's recent purchase of the Chevron/Texaco headquarters in Harrison. Westchester's leasing velocity in the first quarter of 2002 rose 95 percent from the first three months of 2001 to one million sf, Insignia officials note. That, combined with a slowdown of either direct or sublease space coming back on the market, led to positive absorption for the first time in more than a year--almost 519,130 sf of positive absorption, compared to 608,290 sf of negative absorption at the end of the same period last year. In the fourth quarter of 2001, the market recorded a negative absorption of 795,860 sf of office space.
Westchester County's office availability rate, while rising almost two percentage points from the first quarter of last year, decreased more than a point and a half from three months ago to 15.1 percent. The countywide average asking rent fell 39 cents per sf from last year to $25.66 per sf.
Dean J. Shapiro, executive director of Insignia/ESG's Westchester-Connecticut office, says, "These results are highly encouraging considering the state of the office market at the end of last year. Certainly, the sale of the Texaco building had much to do with the outcome, but we also saw a pick-up in local activity--both of which speak to Westchester's viability and future as an office market."
He continues that the Westchester office market "appears to be at the beginning of a turnaround." Shapiro notes that every market with the exception of the southern region of Westchester County experienced positive office space absorption in the first quarter. Another reason brokers are somewhat bullish on Westchester's fortunes is that despite some corporate downsizing programs and business failures, sublease space accounts for just 20 percent of total office availability in the county at present. In comparison, neighboring Fairfield County, CT., has 31 percent of its available space available on a sublease basis at the moment.
The City of White Plains, which in the past several years has been the focus of considerable leasing and investment activity, has been struggling of late. While in the past several years the city benefited from the explosive growth of new technology firms, the past six to 12 months have been difficult as the economic fortunes of many of these former high flying companies have reversed.
In the first quarter of 2002, leasing activity in the Central Business District of White Plains fell 44 percent from the first quarter of last year to just 98,160 sf and availability grew 22 percent to 1.3 million sf as a result of last year's sublease space eruption. The availability rate, consequently, increased more than four percentage points to 21.5 percent -- a level that had not been reached since the end of 1999. In total, sublease space now makes up 32 percent of downtown White Plains' entire office availability -- the largest contiguous block of which totals 253,670 sf at 44 South Broadway.
Although its office availability rate is once again inflated, Insignia/ESG officials report that in the past three months activity is on the upswing in downtown White Plains. Compared to the fourth quarter of 2001, leasing velocity increased by 39 percent, and the availability rate fell by a quarter of a percentage point in the first three months of this year.
Shapiro says that Westchester's (and the City of White Plains') problem has been and continues to be a few underperforming buildings that have failed to attract tenant or buyer interest and therefore has saddled the market with large blocks of unoccupied space. He expects that in the months ahead, the Westchester office market will continue to improve and that its office availability rate "will trickle downward."
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
