CBRE report shows both confidence and softness in 2Q office market

Real estate services and investment organization CBRE says data in its report on Westchester County office activity for the second quarter of 2019 indicates there still is good news to be found within the market even though some numbers are down.

The report shows that leasing activity was comparatively light in the second quarter, down almost 8% year over year at 153,904 square feet, which was about 45% below the five-year average. On the plus side, when the second quarter is combined with the first quarter the result is 405,000 square feet of leasing activity, up 9% over the same period in 2018.

Another bright spot is renewal activity, which was 34% above the five-year quarterly average and the highest quarterly number at 226,000 square feet since the third quarter of 2017.

The top four renewal deals for the second quarter involved:
Ӣ law firm Skadden, Arps, Slate, Meagher & Flom LLP, which renewed 56,239 square feet at 360 Hamilton Ave. in White Plains;
Ӣ the New York State Department of Labor, which renewed 35,031 square feet at 120 Bloomingdale Road in White Plains;
ӢRegus, the worldӪs largest provider of flexible workspace solutions, which renewed 23,050 square feet of space at 50 Main St. in White Plains; and
ӢGreywolf Capital Management, which renewed 18,531 square feet of space at 4 Manhattanville Road in Purchase.

The space availability rate remained flat at 17.3% when compared with the second quarter of 2018. The average asking price on leases throughout the county also was essentially flat at $28.32, but in a year-over-year comparison was down 4.3%. CBRE said the dip was because expensive space was leased or otherwise removed from the market.

In analyzing economic conditions, CBRE noted that the overall economy of Westchester County is strong with an unemployment rate of 3.4%, which is below both the New York state unemployment rate of 4% and the national unemployment rate of 3.6%. CBRE noted that jobs in businesses that are primary users of office space either stayed flat or increased and it pointed to state Department of Labor data showing the financial activities sector gained 1,100 jobs from last year.

CBRE found that both the northern and western sections of the county had positive net absorption of space during the second quarter. Availability in northern Westchester stood at 21.1% with 25,000 square feet of space being absorbed. In western Westchester, net absorption for the second quarter was 37,000 square feet resulting in an availability figure of 23.8%.

CBRE said that the largest block of space to become available for lease in the second quarter was about 25,000 square feet and blocks of large space in the county remain limited with only six blocks of more than 100,000 square feet being available.

The highest asking rents averaging $34.28 per square foot were in the central business district submarket around White Plains. The east submarket came in at $27.80, the west at $26.12, the north at $26.64 and the asking rents in the south submarket of Westchester County averaged $26.99 per square foot.