Signs of a turnaround of sorts are beginning to appear for the Westchester office market, as more vaccine shots are going into the arms of office workers along with many other people in the county.
According to the 2021 first quarter Westchester office market report from commercial real estate services firm Newmark, total office leasing activity in the quarter hit 515,000 square feet, a substantial recovery from the 273,000 square feet leased in the first quarter of 2020 and the 265,000 square feet that was handled at the end of the year.
The increased activity didn”™t necessarily mean that the market is out of the woods, since the net absorption rate for office space was a negative 136,000 square feet. Nevertheless, it was a dramatic improvement from the 660,000 square feet loss of occupied space racked up in the first quarter a year ago.
Newmark explained that many firms extended their leases for short terms to allow them time and flexibility in analyzing their situations. Newmark suggested that large companies can be expected to continue to be cautious and pay attention to reassessing their real estate footprints.
Newmark found that the average asking price for space went up 2.8% from the first quarter of 2020 to the first quarter of this year, at $28.30 per square foot.
The company said that the top lease transactions in the first quarter included: a renewal of 106,000 square feet by Amalgamated Life Insurance Co. at 333 Westchester Ave. in White Plains; a 35,000-square-foot renewal by Ampacet Corp. at 660 White Plains Road in Tarrytown; and a 19,000-square-foot renewal at 145 Huguenot St. in New Rochelle by the New York State Department of Health.
Newmark noted that a new lease was written for 18,450 square feet at 50 Main St. in White Plains to be occupied by the U.S. Attorney”™s Office.
Businesses in the finance, insurance and real estate sectors were responsible for approximately 45% of the square footage that was leased in the first quarter. Health care accounted for about 15% of the leasing volume.
Newmark suggested that landlords and tenants have a lot to do in evaluating office space needs.
“For now, most companies agree that the office remains valuable for creating culture and a sense of belonging in the workplace,” Newmark said. “However, planning for a hybrid model of working both remotely and in-person will still require strategic space planning, keeping in mind that companies are expected to de-densify somewhat as a result of lessons learned through the pandemic.”
