Although many office workers are still working primarily from home and for many, plans to return are still up in the air, the Westchester and Fairfield office markets are seeing huge comebacks in leasing activity, according to recent reports from CBRE.
As the Business Journals reported last week, office leasing in Westchester and Fairfield was up by 73% and 23%, respectively, from 2020 to 2021. Westchester”™s 964,000 square feet of leasing for 2021 surpassed its five-year annual average by 9%. Although Fairfield”™s office leasing tallied up to 1.7 million square feet for 2021, it fell short of its five-year annual average, by 13%.
According to Craig Ruoff, an executive managing director for Colliers and a commercial real estate expert with over three decades of experience focused around the Westchester market, demand for the local area has picked up and persisted throughout 2021, after the markets began to recover from the Covid-19 pandemic”™s initial outbreak that colored most of 2020. Ruoff was involved in completing 13 leases in 2021 worth roughly $13 million and totaling more than 60,000 square feet. He also represented the commercial real estate industry on Westchester County”™s Reopening Task Force.
“I saw that there was a lot of demand in Westchester still, even though you hear so much talk that there isn”™t a demand anymore, there isn”™t interest, there isn”™t activity, but there certainly is,” Ruoff said.
Ruoff reported that many office-based companies, in his experience, were able to grow during the pandemic, and saw the value in investing in their office space subsequently. Almost all of the companies he”™s worked with in the timeframe of the past year were seeking out expansions instead of downsizing, and prices are reaching new highs, particularly in downtown White Plains, the county”™s central business district, and areas like Yonkers and New Rochelle, which have been budding more recently in terms of office space.
“Downtown, we’re seeing numbers on the high end, in the low 40s,” he said. “And we’ve never seen that, you know, in my career, until just recently. It’s interesting that we’re still doing well in Westchester.”
Ruoff pointed out that the recent trend in Westchester for some former office spaces to be converted to residential and retail has helped retain the market size and lease rates.
“There’s been a consistent reduction in the size of the market as buildings have been repurposed, he said. “We watched Corporate Park Drive change from commercial office space and go to retail, with Wegmans, and residential, and that has an impact on the market. So markets like the I-287 corridor have really been able to maintain their numbers.”
Overall, Ruoff has noticed that despite reports of many companies leaving the New York metro area, the majority of his deals were renewals, indicating that a lot still see Westchester as a desirable place to conduct business. He named the county”™s low pricing compared to New York City and Fairfield, its transportation options and its business-friendly government as key features that make it attractive for businesses. A factor strengthening the county”™s appeal more and more now is the increase in residential development and even luxury housing in previously primarily commercial areas.
As for a phenomenon unique to our current times, Ruoff said that he is beginning to see a trend he has never seen before in his experience in the industry ”” the ability for companies to invest in retrofitting their existing leased offices. This is afforded either through time spent already working remotely in the first place, or because workers who are accustomed to keeping the firm functioning from home can return to doing so while renovations are completed. Ruoff referenced Prager Metis as one example of a company renovating their space like this.
“They could restructure for their same space, because they already experienced a period of time of working remotely and they’ve gotten comfortable with the ability to do that,” he said. “So rather than having to relocate when they needed to completely redo their space, they were able to do it in place, essentially by having everyone go back to remote or currently the spaces being retrofitted right now. And then when it’s done, they’ll move back in.”
Many commercial landlords are investing in building upgrades and amenities as well, according to Ruoff, having made good use of time being shut down or without tenants. RPW, for example, redid its main reception, lobby, conference rooms and cafeteria at 800 Westchester Ave., and Ruoff cites this as a reason many of his clients are moving there or staying.
“It’s always been important, but it’s even more important now,” he said. “These days people want their employees to come to work. They want people to come back to the office. How do you do that? What can you offer? Well, if you’re in a property or you’re moving to a property, you can take a property that has more to offer for your employees than you were before.”
