Though their firms”™ leasing numbers vary, major brokers agree Westchester County”™s commercial office market remains largely unchanged over the last year.
The third-quarter market, though, did show improved leasing activity from the second quarter, according to brokers at Cushman & Wakefield and CB Richard Ellis. At Cushman & Wakefield”™s Stamford, Conn., office, Senior Managing Director James Fagan said the county market”™s recovery should be boosted in this fourth quarter, when several tenants are expected to sign leases ranging from 30,000 square feet to 130,000 square feet of space.
Cushman & Wakefield reported what Fagan called a “stubbornly high” third-quarter vacancy rate for class-A buildings of 19.6 percent. The county continues to see more office space added to the market than leasing activity has absorbed. The overall absorption rate this year as of early October was a negative 165,568 square feet, according to Cushman & Wakefield.
Newmark Knight Frank reported net third-quarter absorption in the county at a negative 77,589 square feet.
Cushman & Wakefield reported class-A rental rates in the third quarter averaged $29.94 per square foot, a drop from the second-quarter average of $30.20 per square foot and $30.89 per square foot in the third quarter of 2010.
CB Richard Ellis analysts said overall average asking rents stayed nearly the same as last year at $26.38 a square foot. Newmark Knight Frank analysts said third-quarter asking rents averaged $26.09 a square foot, down from $26.41 in the second quarter and $26.50 a year ago.
Westchester”™s available office space ”“ space that is being actively marketed, including subleased space ”“ amounted to 23.8 percent of total square footage in the county, according to Newmark Knight Frank. The availability rate was almost unchanged from a year ago.
CB Richard Ellis said the county”™s available office inventory improved to 5.7 million square feet in the third quarter, a 5.7 percent drop from last year. The availability rate in turn dropped to 18.6 percent from 19.4 percent a year ago. Contributing to that third-quarter improvement, MBIA took 84,300 square feet of space off the market at 113 King St. in Armonk.
Brokers said a drop in large leasing transactions continued in Westchester in the third quarter. To date this year, deals less than 20,000 square feet account for 78 percent of leasing, slightly above last year”™s 77 percent level, according to CB Richard Ellis.
“Leasing volume in Westchester was rather dismal this quarter,” said John D. Goodkind, managing principal at Newmark Knight Frank in Greenwich, Conn., “not so much in terms of number of deals signed, but in terms of square footage coming off the market.” His company reported third-quarter leasing volume was at the lowest level in the county since 2008, with only two tenants inking deals for more than 20,000 square feet of space. (Unlike its two major competitors in Westchester, Newmark Knight Frank reported the 71,191-square-foot lease by Acorda Therapeutics for its new headquarters in Ardsley as a second-quarter transaction.)
Amid continued economic uncertainty, “Companies continue to tighten their belts” and put off relocation or expansion plans, said Robert Caruso, senior managing director at the CB Richard Ellis office in Stamford.
At Cushman & Wakefield, Fagan compared leasing activity in the Westchester market to “shuffling a deck of cards.” Though tenants are leasing space, most are moving within the county and often within the same submarket, he said.
Predicting a more robust 2012, Fagan said Westchester County will see five to six deals of more than 100,000 square feet over the next 12 months.
