STAMFORD, CT-Lending support to the assessment that suburban office is on the rise, Jones Lang LaSalle reported Monday that New York's Westchester County saw a rebound in the number of new and larger office leases in the first quarter of the year. The strong leasing activity pushed down vacancy rates in many of the county's office submarkets while helping to keep area average asking rents stable, according to the announcement.
“The first three months of this year showed a rebound in new and larger leases, compared with heavy renewal activity during 2012,” says Chris O'Callaghan, managing director and Westchester County market lead for Jones Lang LaSalle, in the announcement. “The shift towards relocations rather than renewal signals more business confidence as local tenants are willing to consider the upfront capital associated with moving.”
However, the gains weren't all positive, he says in the statement. “While the activity helped to boost leasing volume compared with levels we saw one year earlier, the transactions did not result in substantially greater net absorption levels.”
Although vacancy rates fell in all building classes in a majority of submarkets in the first quarter of the year, overall vacancy rates in Westchester County were weighted down by large blocks of newly-available space in the White Plains CBD and Westchester North submarkets, reports JLL. The county's overall vacancy rate remained unchanged at 18.5% in the first quarter of 2013. The Class A vacancy rate rose slightly to 20.5% this quarter, increasing 2.5% from the Class A vacancy rate of 20% in the fourth quarter of 2012.
Westchester County posted an increase in overall average asking rental rates for the second quarter in a row, according to the report. Overall rents rose to $26.09 per square foot in the first quarter of 2013, an increase of 1.4% from overall rents of $25.74 per square foot the previous quarter.
The White Plains CBD posted an increase in vacancy rates in the first quarter of the year, assublease space at 10 Bank Street was added to the market. The overall vacancy rate rose slightly to 21.6 % in the first quarter of 2013, an increase of less than 1% from the overall vacancy rate of 21.4% the previous quarter. The submarket's Class A vacancy rate grew to 23.7 % this quarter, a rise of 6.3 % from the Class A vacancy rate of 22.3 % in the fourth quarter of 2012.
Average asking rental rates in the quarter for Class A space in the White Plains CBD were driven down by the discounted sublease space available at 10 Bank Street. Overall rents in the White Plains CBD rose to $28.79 per square foot in the first quarter of 2013, an increase of 1.2% from overall rents of $28.45 per square foot the previous quarter. Rates for the submarket's Class A product fell to $29.39 per square foot, a drop of 2.4% from Class A rents of $30.10 per square foot in the fourth quarter of 2012, the report states.
Due to robust leasing activity along the I-287 East Corridor, vacancy rates declined in all building classes for the third consecutive quarter. In the largest deal of 2013 to date, Xylem Inc. signed for 67,145 square feet at 1 International Drive, relocating to the I-287 East Corridor from within Westchester County, JLL states in the report. The overall vacancy rate fell to 17.5% in the first quarter, a decrease of 4.9% from the overall vacancy rate of 18.4% in last year's fourth quarter. The submarket's Class A vacancy rate dropped to 18.7% in the first part of the year, a decrease of 4.1% from the Class A vacancy rate of 19.5% in the fourth quarter of 2012, says the report.
The heavy interest from space users in I-287 East Corridor office space drove up average asking rents for all building classes in the first quarter of the year. Overall rents rose to $27.71 per square foot in the first quarter of 2013, an increase of 2.8% from overall rents of $26.95 per square foot the previous quarter, JLL's data shows. Rates for the submarket's Class A product grew to $27.72 per square foot this quarter, an increase of 2.4 % from Class A rents of $27.07 per square foot in the fourth quarter of 2012.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
