Office leasing activity in the Westchester market for the second quarter of 2020 is down by 36.6% from what it was in the same period last year, according to a new report from real estate services firm Newmark Knight Frank (NKF).
However, NKF shows that the average asking rent in the second quarter of 2020 was $27.65, higher than the $27.54 per square foot in the first quarter of the year and the $26.83 being asked in the second quarter of 2019. Asking rents for Class A office space averaged $28.21 per square foot, up by 3% over the second quarter of 2019.
Leasing activity for the quarter was placed at 300,000 square feet. Despite it being more than a third lower than what happened a year ago, it was 10.1% above what had been leased in the first quarter of this year.
A significant chunk of that was the sublease by Argus Information and Advisory Services for 66,000 square feet of space that had been occupied by Bunge at 50 Main St. in White Plains. That one transaction resulted in a doubling of the total square footage leased during the second quarter in downtown White Plains to 140,000 square feet.
NKF said that the top lease transactions at the halfway point through the year, in addition to the Argus transaction in White Plains, were: the new lease for 32,000 square feet by Sterling National Bank at 360 Hamilton Ave. in White Plains; Derma Path’s new lease for 31,181 square feet at 1133 Westchester Ave., also in White Plains; the new lease of 19,603 square feet by Westchester Visiting Nurse Services at 1311 Mamaroneck Ave. in White Plains; and Schott Corp.’s new lease of 14,140 square feet at 2 International Drive in Rye Brook.
The report said that rent collections have been better than expected by landlords even though many offices are going largely unused because of the pandemic.
“Multitenant buildings with a lengthy tenant roster, including the small accountants and attorneys, are seeing more traffic than single-tenant buildings or buildings with large occupiers,” the NKF report stated. “In fact, rent collection was better than what most landlords expected, even though the majority of buildings have mostly empty parking lots.”
The report said that a growing number of executives want to get their employees back into the office. NKF said that while the remote work-from-home experiment worked well for a while, it might no longer be as beneficial as it was at first as many executives are noticing lower levels of productivity and inefficiencies in work product.
“This poses a challenge for New York City firms whose employees fear going back to the city so soon and therefore have to find a different location,” NKF said. It said that there have been what it described as “a handful of Manhattan firms” looking for small, short-term satellite offices in the Westchester market.
The NKF report said that the long-term effects of the pandemic on the Westchester office market are still unknown.
“Those tenants with impending leases expiring will have to engage the market and make significant decisions about space needs,” NKF said. However, it also said that the ones with an option to extend short-term are likely to take that route and stay where they are in order to gain a clearer perspective of market conditions.
