Thomas Pajolek Thomas Pajolek, executive vice president, CBRE

NEW YORK—Fairfield County experienced an increase in leasing activity and Westchester County remained steady in the third quarter of 2017, according to CBRE office market reports.

“Leasing activity was up from last quarter as Fairfield County experienced a number of renewals and new commitments,” says Thomas Pajolek, executive vice president of CBRE. “The market experienced a drop in overall availability rate while rents remained stable.”

In a GlobeSt.com interview, Pajolek explains rental activity tends to slow down in the summer, and the tenancy of three sizable companies provided the primary reason for the Q3 results. ACR Capital Management and Remedy Partners expanded office space, and Bank of America was a new requirement to the market.

Fairfield County’s total leasing activity was up to 941,784 square feet, compared to 800,009 total square feet in the previous quarter, and 661,581 square feet rented during the same time period last year. Bank of America leased 119,216 square feet; ACR increased office space to 86,514 square feet, and Remedy expanded to 40,013 square feet. The market posted an availability of 24.5%, which was a 1% point drop from 25.4% recorded in Q2 2017. Average asking rents at $32.11 per square foot was consistent from the prior quarter.

Market indicators show Westchester Country trending in a positive direction for 2017, with the third quarter constant when compared to the previous two quarters, according to William V. Cuddy Jr., CBRE executive vice president.

Bill Cuddy William V. Cuddy Jr., executive vice president, CBRE

He tells GlobeSt.com, “The Westchester office market history has shown some volatility and numbers that support a stable yearly market is a positive direction.”

During the third quarter, the Westchester County office market experienced 535,813 square feet in total leasing activity. This is an increase from 455,866 square feet of total leasing activity during the second quarter. Plus, average asking rents increased to $28.54 per square foot, up from $27.81 in the previous quarter.

The largest transactions completed in Westchester during the third quarter included a 295,922-square-feet renewal and expansion by Montefiore Healthcare System across five properties in Yonkers; a 20,845-square-foot renewal by Eckert Seaman Cherin & Mallot and a 19,534-square-foot commitment by MCI, both in White Plains. The availability rate dropped to 22.40% in the third quarter of 2017, down from 23.42% posted in the third quarter of 2016.

“These are exciting days in the Westchester market,” says Cuddy. “There is a migration in investing. When buildings reach obsolescence, after 30 to 40 years, we are seeing them being repurposed.”

He points to a 36-year-old office building at 900 King Street in Rye Brook. The 215,000-square-foot structure, owned by Rye King Associates, LLC, currently houses administrative offices for Greenwich Hospital. However, the owner has plans to demolish the building and to develop a multifamily, age-restricted residency, on the more than 17-acre site.

Cuddy also notes that in the town of Harrison, Wegmans Food Markets is coming to Westchester Avenue. Plans for demolition of a three-building office complex to make way for the trendy grocery store, are currently under environmental review. Wegmans regularly makes the Forbes “America’s Best Employers” list, and the Fortune “100 Best Companies to Work For” list, this year ranking number two, right behind Google.

Wegmans is expected to replace the buildings at 106-110 Corporate Park Drive, which are part of one of the oldest office parks in Westchester County. The four-mile stretch called Platinum Mile runs along Interstate 287 in White Plains, Harrison and Rye. The area epitomizes the once heralded status of corporate office parks but is now under the process of attempted reinvention.

As prices continue to increase in Manhattan, young adults are looking for more space to raise families. Thus, there is a growing interest in urban/suburban neighborhoods. With people wanting to live and work in the same areas, Cuddy sees in addition to multifamily homes in Westchester County, in particular New Rochelle, Yonkers and White Plains, developers considering corporate offices for investments.