There is plenty of room to be upbeat about some commercial real estate market segments according to what was said at the Building Owners and Managers Association of Westchester’s Annual State of the Market luncheon. The event took place at 360 Hamilton Ave. in White Plain and was attended by more than 100 commercial property owners and brokers.
BOMA Westchester is an affiliate of BOMA International, which is the oldest and largest association in the office building industry. There more than 17,000 members of BOMA are International and they own or manage more than 9 billion square feet of commercial properties.
The panelists for the Westchester event included Ian Ceppos of JLL, Kevin Plunkett of Simone Development, Mark Stagg of the Stagg Group, and Kevin McCarthy of Cushman Wakefield. The panel discussion was moderated by Betsy Buckley of JLL.
The panelists were generally upbeat about the outlook for the industrial, health care and residential markets but not so upbeat when discussing the amount of vacant office space.
McCarthy said about 26% of 23 million square feet of office space in Westchester is vacant, and vacancies are likely to continue.
“We’re in a crisis,” McCarthy said. “In Westchester County, we got quality infrastructure, health care, industrial properties. But we do not have quality offices.”
Ceppos said some types of industrial properties have been in high demand amid the e-commerce boom. He said in Westchester the demand is mostly for warehouses and distribution centers, not necessarily the manufacturing facilities of the past. While demand for industrial space remains high, availability is limited. Ceppos said that was due in part to it being too expensive to build new industrial spaces in Westchester. He said more industrial space is being built in Putnam and Orange counties.
Stagg expressed concern about the number of new apartments that can be absorbed by the Westchester market in view of the numerous multifamily residential units that either have come on the market or are under construction. He said more affordable housing and smaller projects are needed
“I think developers will be very selective in 2024,” Stagg said.
Plunkett pointed out that some of the major hospitals in New York City are expanding to Westchester and looking for new facilities. Simone Development, where Plunkett is director of strategic initiatives, recently acquired the office building at 1 Executive Blvd. in Yonkers to convert into a medical office building.
“There are a lot of exciting things going on in health care,” Plunkett said. “We think it’s going to continue. We’re very positive about being able to expand in the Westchester community even more with the hospital systems.”
Speaking later with the Business Journal, Plunkett said Simone’s 1 Executive Blvd. will work perfectly for medical uses because right across the street is the Boyce Thompson Center, which has a number of different medical uses together with some retail uses and is close to St. John’s Riverside Hospital.
“We think buildings like 1 Executive Blvd. will become attractive for medical uses, wellness uses, preventive medicine uses,” Plunkett said. “I think that’s part of a great strategy for Westchester County.”
Plunkett said that working from home has created a need for owners of office buildings to rethink what can go into their properties.
“There is a place for offices. People come to the office for many reasons; certainly to work, but also for the collegiality of working,” Plunkett said. “Service businesses will continue to need office space, lawyers, accountants, professionals. I think we’ll see a slight bounce back for office use, office tenants, amenities that attract people to come to an office, not just the workplace environment but the entire campus environment.”
Plunkett said he thinks the market has seen the worst of the effects of the Covid pandemic and the shift toward remote working but there still are various challenges ahead.
“Affordable housing is a challenge and we’re all trying to work on it. I did it when I was in government and I’m trying to do it in the private sector,” Plunkett said. “I find Westchester to be very resilient. It’s a great county and I think our economy is healthy. We have a great workforce. We’re in the middle of a resurgence of the Hudson Valley; there’s a lot going on north of Westchester County. And, of course, we have New York City, which is the mecca of economic activity whether it be in the financial sector, the health care sector, construction. Good days are ahead for Westchester.”
