 
New office leasing in Westchester County slowed markedly in the first quarter and tenants signed for smaller space at substantially decreased rents offered by competing landlords, according to commercial real estate firms in their quarterly market reports. Â
Cushman & Wakefield said leasing activity for class-A office space in the county totaled approximately 88,645 square feet for the quarter, a 72 percent drop from first-quarter leasing in 2008 and 27 percent decline from last year”™s fourth quarter.
Overall vacancies continued to rise countywide, with the first-quarter vacancy rate for class-A space at 19.4 percent, compared with 18.3 percent in the last quarter and 17.6 percent a year ago, Cushman and Wakefield reported.
Though overall asking rents for class-A space across the county were down only slightly from 2008, averaging $31.64 per square foot at the close of the first quarter, Cushman and Wakefield brokers said there was a large gap between asking and taking rents as landlords vying for the few tenants in the market dangled concessions such as free rent and tenant-improvement allowances.
CB Richard Ellis reported 50 first-quarter office leasing transactions totaling 182,977 square feet, of which 109,045 square feet was for class-A building space. The total leasing volume was a 68 percent decline from the five-year quarterly average of 569,387 square feet.
That decline was due to smaller-size deals as many tenants downsized their operations, CBRE brokers said. The average lease size was 3,660 square feet in the first quarter, about 46 percent less than the historical average of 6,832 square feet. The average deal in the first three months of this year was down 39 percent from the fourth quarter of 2008 and marked a 48 percent decline from the average lease size a year ago.
CB Richard Ellis reported an overall first-quarter availability rate in the county of 17.31 percent, up from 16.33 percent at the close of 2008 and 15.72 percent a year ago.
Newmark Knight Frank reported a lower vacant available rate of 13.1 percent countywide in the first quarter, up from 12.2 percent in the fourth quarter of 2008 and 12.3 percent a year ago. Nearly 65 percent of deals closed here in the first quarter were lease renewals. Â
Brokers at First Service Williams said the Westchester office market, as in neighboring Fairfield County, Conn. in the first quarter for the first time showed “broad weakness” in the economic downturn. They said tenants here, as in almost every other market in the nation, are hesitant to commit to new space and make large up-front capital expenditures.
Brokers said some of the most noteworthy Westchester leases in the first quarter were Mercy College”™s 35,000-square-foot renewal at 2651 Strang Blvd. in Yorktown Heights; Regeneron Pharmaceuticals”™ 15,532-square-foot lease at 777 Old Saw Mill River Road in Tarrytown; The Bank of Tokyo-Mitsubishi”™s 10,986-square-foot transaction at 555 Theodore Fremd Ave. in Rye; MacSteel International-USA Corp.”™s 10,000-square-foot lease at 333 Westchester Ave. in White Plains and Acorda Therapeutics”™ 45,100-square-foot renewal at 15 Skyline Drive in Hawthorne.
“As painful as the market is for landlords and owners who are long on space, there are significant opportunities for tenants and investors to acquire space at historically low levels,” said James Fagan, senior managing director and head of Cushman & Wakefield”™s Westchester County and Fairfield County region. “The Westchester County real estate market is fundamentally sound and well worth the investment.”
 “While not spectacular when compared to previous years, Westchester County”™s commercial real estate market has continued to boast steady, albeit smaller-scaled activity,” said Robert Caruso, senior managing director of CBRE”™s Westchester/Fairfield operations. “For savvy tenants currently in class-B locations and space, the time to upgrade is in the next six to nine months, as landlords are reviewing their concession packages and offering deals that are more in line with current market dynamics.”
“The takeaway news is that there”™s activity,” said John D. Goodkind, managing principal of Newark Knight Frank”™s Greenwich office. “Compared to 24 months ago, today”™s numbers would be bad news. Just the fact that we”™ve seen movement is a plus. We sense that leasing activity will begin to turn around.”Â
