Reader’s Digest shrinks as office vacancies rise in county

Reader”™s Digest Association Inc. further shrank its presence in Westchester County when it shed two floors of office space in a second-quarter downsizing at the company”™s downtown White Plains location.

In 2010, the global publishing company closed its 70-year-old headquarters on the Chappaqua Crossing campus in the town of New Castle and relocated its operations to new corporate headquarters in Manhattan and 44 S. Broadway in White Plains, where about 525 employees initially were to be employed.

Reader”™s Digest in the recently ended quarter closed on a new 54,000-square-foot lease at 44 S. Broadway, the 21-story Westchester One office tower. It was the only lease deal larger than 20,000 square feet of space in the quarter, according to commercial real estate firms in the county market. But the major tenant also gave up approximately 89,000 square feet of space in Westchester One, according to RHYS Commercial Real Estate in Stamford, Conn.

That downsizing raised the vacancy rate for Class A buildings in the White Plains central business district to 24.4 percent from 23.7 percent in the first quarter, according to researchers at Jones Lang LaSalle”™s Stamford office. The county”™s total Class A vacancy rate rose slightly to 20.7 percent in the second quarter.

Jones Lang LaSalle reported “moderate” leasing activity that totaled less than 530,000 square feet in the second quarter, compared with a first-quarter deal volume of slightly more than 500,000 square feet.

CBRE Group Inc., though, reported “strong” leasing activity from April through June totaling 602,280 square feet of space. Most of that activity involved company expansions and moves within the county, with no major moves from outside the market, CBRE noted.

CBRE researchers said the second-quarter showing raised the county”™s total leasing activity at midyear to 1 million square feet of office space, a 70 percent increase from midyear 2012.

“The county”™s office market is showing signs of a rebound, but its strength continues to be in the form of non-office leasing activity” by biotechnology and medical-related tenants, CBRE noted.

The state”™s largest biotech employer, Regeneron Pharmaceuticals Inc., announced it will add two new buildings with 300,000 square feet of laboratory and office space to its headquarters at Biomed Realty Trust”™s Landmark at Eastview life sciences campus in the town of Greenburgh.

Westmed Medical Group, an approximately 250-physician group practice, in the second quarter closed on its deal with landlord Simone Development Cos. to fully lease an 85,000-square-foot building to be built in Harrison Executive Medical Park in Purchase. With construction expected to start this summer, it will be the first Class A office property built in the county in 25 years.

In the county”™s largest second-quarter real estate deal, New York Medical College closed on its $17.5 million purchase of 19 Skyline Drive in Hawthorne, a vacant 248,000-square-foot office building formerly owned by Mack-Cali Realty Corp. Jones Lang LaSalle said the Valhalla medical school”™s acquisition “prevented a complete backtrack” in the county”™s overall vacancy rate for both Class A and Class B buildings.

Brokers at Jones Lang LaSalle said they see Westchester-focused tenants shifting their preference from the White Plains central business district to the I-287 East corridor, where the largest number of deals were recorded in the second quarter. Still, the I-287 East submarket”™s vacancy rate for Class A buildings rose to 19.6 percent from 18.7 percent in the first quarter.