Industrial and flex properties, along with multifamily apartment buildings, continued to be in high demand in Westchester County during the third quarter of the year, according to a new report from Houlihan Lawrence Commercial.
The report, written by real estate salesperson Teresa Marziano and edited by associate real estate broker Karen Heller, found that multifamily apartment properties in Westchester had the highest occupancy rates, the strongest absorption and highest lease rates in years. It placed occupancy at between 97% and 97.5%, up slightly from the third quarter of 2018. The report said that fundamentals in the sector have been strong for the past 12 quarters and deliveries of new apartments have amounted to 5% of the existing inventory, which the report said is high by historical standards.
The report stated that demand for office space in Westchester weakened during the third quarter, but fewer tenants moved out resulting in a balance of supply and demand. The report found that most of the tenants who moved, did so from space that was on a sublease, suggesting that the tenants moved because they wanted permanent locations.
The report found an uptick in rents of about $1 per square foot from the third quarter of 2018 to the third quarter of 2019. Smaller offices in buildings outside of the core of a city, which are in a city but not walkable to the city’s center, continued to be harder to lease.
The report found that retail space rentals rebounded somewhat in the third quarter after dipping in the first and second quarters of 2019. The vacancy rate which had been a bit below 4% in the third quarter of 2018 fell to just above 3% for the same period of 2019.
Overall, price per square foot, which had dropped by about $1.50 during the first and second quarters of the current year, rebounded to where it had been in the third quarter of 2018 at slightly above $28.50.
“New businesses have become more hesitant to lease other than the minimum space required and existing businesses appear to be delaying expansions in the fact of troubling political headlines, trade disputes and falling consumer confidence,” the report stated.
Another factor affecting the retail sector is that it has become more expensive to rehabilitate and upgrade space, which has proven to be a hurdle in returning what the report called “tired inventory” to productive use.
Industrial and flex space continued to be an area of the market where demand was strong during the third quarter of the year. The report said that the growing demand by consumers for quick delivery of products ordered has translated into a demand for warehouses and similar space close to densely populated cities.
Houlihan Lawrence has 30 offices with about 1,300 agents serving Westchester, Putnam, Dutchess, Columbia, Ulster and Orange counties in New York and Fairfield County in Connecticut.