Their office building in White Plains is not near the Metro-North train station, where rental rates and commercial property values are especially climbing. Still, the new owners of Westchester One in the city”™s central business district expect to reap the benefits too of companies”™ migration from Manhattan.
And Beacon Capital Partners, the Boston-based real estate investment firm that a year ago paid $181 million for the county”™s tallest office building, plans to start a downtown shuttle service from its building at 44 South Broadway for employees commuting by mass transit.
Beacon executives from the company”™s midtown Manhattan office recently were joined by city officials and brokers from Cushman & Wakefield, the managing agent at Westchester One, at an unveiling of Beacon”™s ongoing $12 million building renovations project. The City Hall entourage was led by Mayor Joseph M. Delfino, the city”™s unabashed real estate salesman. Delfino was saluted at the reception for bringing $2 billion in investment and 2,000 new downtown residential units to White Plains in the last five years of his 10-year administration.
“Cushman and Wakefield, I”™m available,” he told Westchester One”™s marketers. “I”™ll be the best broker you can find. Call me up when you”™ve got someone on the hook and I”™ll sell them on White Plains. I don”™t want the commission. My commission is having people come here.””
The brokers already have sold one Manhattan company, Disney Publishing Worldwide, on moving to White Plains. The Disney company is expected to soon announce its plans to lease about 60,000 square feet of space at Westchester One and relocate about 175 employees there.
Brokers also are negotiating leases with existing IBM sublease tenants at Westchester One. They are attempting to fill five floors being vacated by Argent Mortgage Co. L.L.C., the building”™s largest tenant that fell victim in the last year to the collapse of the subprime home mortgage market.
A Beacon executive said some Manhattan-based tenants maintaining disaster recovery offices in the building have been encouraged to make more active use of the space. “We don”™t want to run a mausoleum,” he said.  Â
“We”™re seeing demand” from prospective tenants “within the market of Westchester, within the market of White Plains, within the region of Connecticut,” said Adam I. Popper, managing director of Beacon Capital Partners in New York. “We”™re seeing a lot of interest from Manhattan.”
That interest in White Plains marks what Cushman and Wakefield, in its recent midyear report on the Westchester County commercial real estate market, called “the beginnings of a migration from a suburban market of Manhattan to becoming a Manhattan sub-market.”
“Manhattan space shortages and rising rents, combined with a lack of large blocks of available space, are driving interest in Westchester County and specifically downtown White Plains,” said Jim Fagan, senior managing director and head of Cushman & Wakefield”™s Fairfield County, Conn., and Westchester County region. “White Plains is a viable solution for companies in the market for high-end office space that is also affordable. We are seeing tenants from a diverse range of industries looking into options here.”
In a 10-year economic comparison, Cushman & Wakefield has calculated that a company renting 200,000 square feet at Westchester One, starting at $35 per square foot, would pay $52.71 million in total expenses, compared with $141.49 million for like-sized midtown Manhattan office space starting at $80 per square foot. The difference amounts to a 63 percent savings in White Plains.
Cushman & Wakefield reported that steady leasing activity brought the overall class A and class B vacancy rate in Westchester County to 14.8 percent at the close of the second quarter, down from 15.4 percent at the same time last year. Direct rents for class A and class B space averaged $30.84 per square foot, up from $29.03 a year ago. Company analysts said the office market has swung in favor of property owners, who can end the “sale” in rents and curb generous concessions to attract tenants.
In the White Plains central business district, large blocks of space added to the market accounted for an increase in the midyear vacancy rate to 12.2 percent, up from 11.1 percent a year ago. Direct average rents, however, increased to $33.19 per square foot compared with $30.77 a year ago.
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