For the first time since 2015, office leasing in Westchester County recorded an increase on a year-over-year basis, according to the fourth quarter office leasing report from real estate services and investment firm CBRE.
Total leasing activity for 2019 came in at 912,000 square feet, an increase of 3% from 2018. In the fourth quarter of the year, leasing activity totaled 311,730 square feet.
The year-over-year asking rent went down by 4.2% to $28.33 per square foot. CBRE said the decline was because of expensive space being removed from the market through a combination of leasing and adaptive repurposing.
Average asking rents in the White Plains Central Business District (CBD) saw a 2% drop year-over-year, ending at $34.73 per square foot.
In the eastern area of the county, rents fell 3% year-over-year and ended 2019 at $27.70 per square foot.
The western submarket was essentially flat, ending 2019 at $26.22 per square foot.
There was a 4% drop in average asking rents in the county”™s northern submarket to $26.59 per square foot.
The southern submarket remained essentially flat compared with 2018, coming in at $27.01 per square foot for the 2019 average asking rent.
CBRE said the top renewal lease transactions for the fourth quarter of 2019 in Westchester included Verizon”™s 58,579 square feet at 500 Summit Lake Drive in Valhalla.
Top new leases in the fourth quarter included: 26,326 square feet at 445 Hamilton Ave. in White Plains by Assured Inc.; 26,139 square feet at 500 Summit Lake Drive in Valhalla by WSP USA; and 25,198 square feet at 1133 Westchester Ave. in White Plains by Ameripath Inc. The report said that 70% of the leasing in the fourth quarter was for space in Class A buildings, the highest figure in the past 10 quarters.
CBRE described activity in the White Plains CBD as the lowest performance since 2012 with 89,000 square feet leased during the fourth quarter of 2019 and a total of 213,000 square feet leased during the entire year. It attributed this to a shortage of large spaces.
CBRE found a net positive in terms of absorption, the net change in the supply of space over a specific time. The total positive absorption of 1.9 million square feet of space in 2017, 2018 and 2019 managed to offset the 1.9 million square foot negative absorption that was recorded from 2011 to 2016.
The CBRE report said the Westchester market had 26,433,457 rentable square feet with 4,360,416 square feet available in the fourth quarter for an availability rate of 16.5% and a vacancy rate of 15.5%.
William V. Cuddy Jr., executive vice president at CBRE, said, “The flight to quality continues to drive leasing activity in Westchester.”
He said that tenants predominantly have been seeking high-end space in the Interstate 287 corridor. “Health care occupiers had the largest share of leasing activity for the fourth quarter as well as for the past two years,” Cuddy said. Health care companies were on 20% of the leases in both 2018 and 2019.
