A December surge of leasing activity, concentrated largely in downtown White Plains, only partly redeemed a year marked by lower asking rents, rising availability and vacancy rates and negative net absorption in Westchester”™s commercial office market.
The market”™s biggest draw in fourth-quarter leasing activity has been 44 S. Broadway, the Westchester One in downtown White Plains, where Cushman & Wakefield, marketing agent for owner Beacon Capital Partners, last month brokered an approximately 142,000-square-foot lease with Reader”™s Digest Association Inc., and an approximately 87,000-square-foot lease with Malcolm Pirnie Inc.
In 2009, lease deals at Westchester One accounted for 70.5 percent of all class-A office leasing in the White Plains central business district and slightly more than 31 percent of all class-A leasing in Westchester County, according to Cushman & Wakefield.
Both of the big December deals there, however, added available space to the county market. Reader”™s Digest this year will vacate 296,000 square feet of space at Chappaqua Crossing in Chappaqua to relocate to White Plains and to new headquarters in midtown Manhattan. Malcolm Pirnie this year also will downsize when it moves to White Plains this year from its 118,000-square-foot headquarters building at 108 Corporate Park Drive in Harrison, where the environmental services firm is sole tenant.
In Yonkers, WESTMED Medical Group in December signed a lease to occupy 83,450 square feet at 1 Ridge Hill, an office building in the $630-million mixed-use development under construction in the city. Ridge Hill”™s developer, Forest City Ratner Companies Inc., expects to open the residential, retail, office and entertainment complex in early 2011.
Dr. Simeon Schwartz, president of WESTMED Medical Group, said the multispecialty practice will consolidate and expand its two existing Yonkers offices at Ridge Hill. Dr. Barney Newman, WESTMED”™s medical director, said the facility will include all primary and specialty care services, including radiology and phlebotomy.
Robert Caruso, senior managing director of the CB Richard Ellis Westchester/Fairfield office, which brokered the Yonkers deal for WESTMED, said the fourth-quarter leasing activity by large companies “has signaled a significant increase in tenant confidence in the county.”
Yet the county”™s availability rate rose in the fourth quarter to 17.4 percent, a 6 percent increase from the end of 2008, according to CB Richard Ellis. The county had its sixth consecutive year of negative net absorption in 2009, ending the year at negative 635,379 square feet, a 79 percent increase from 2008, CB Richard Ellis reported.
Â
Cushman & Wakefield reported overall absorption for class-A space in the county at negative 506,898 square feet in 2009 and negative 222,920 square feet for the White Plains central business district.
Â
Newmark Knight Frank reported a higher fourth-quarter availability rate in the county of 21 percent, down slightly from the third quarter of last year. The fourth-quarter leasing surge in downtown White Plains reduced its year-end availability rate to 22.5 percent, according to Newmark Knight Frank.
Westchester brokers and landlords saw a spike in sublease space in 2009. Of 4.1 million square feet of office inventory in 2009, 815,932 square feet is sublease space, a nearly 40 percent increase from 2008, according to Cushman & Wakefield. The White Plains central business district had a 51 percent increase in sublease space added to the market in 2009, the largest in the county.
All three of the county”™s major real estate brokerages reported continued drops in asking rents in the fourth quarter.
CB Richard Ellis said average asking rents throughout the county declined $1.28 per square foot, or 5 percent, over the year to $26.77 per square foot by the end of 2009.
Cushman & Wakefield said fourth-quarter class-A overall rents decreased to $30.81 per square foot, down from $31.77 per square foot at the end of 2008. The most expensive asking rents remained in downtown White Plains, where class-A rents currently average $31.97 per square foot, down $1.71 per square foot from the end of 2008 and $2.97 per square foot from the record high of $34.94 at the close of 2007.
Newmark Knight Frank said the county”™s overall average asking rent declined 6 percent in the fourth quarter, to $27.32 per square foot.
“While we are happy to see improvements in the fourth quarter and remain confident in the stability of Westchester County overall, market conditions, predictably, continue to soften,” said James Fagan, senior managing director at Cushman & Wakefield.
