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Their year-end market statistics differ, but analysts at three real estate brokerages agree Westchester County”™s office market in 2008 was relatively stable, although climbing vacancy rates in downtown White Plains showed the county is not immune to the national recession.
Analysts at CB Richard Ellis (CBRE) in their year-end market report said the rise in available space on the market in the White Plains Central Business District (CBD) was the biggest trend in 2008. The city”™s availability rate rose 4 percent from 2007, to 18.89 percent. At year”™s end, the CBD had more than 251,000 square feet of added unoccupied space since year-end 2007, accounting for nearly 71 percent of added unoccupied office space countywide, according to CBRE market researchers.
The county”™s office availability rate was 16.33 percent at the end of 2008, up from 15.52 percent in 2007, CBRE reported. Newmark Knight Frank reported a lower fourth-quarter availability rate of 12.3 percent in Westchester, up less than one percent from the 11.7 percent rate in the fourth quarter of 2007.
Newmark Knight Frank analysts said the White Plains CBD market remained “highly volatile” in 2008. The availability rate in the district spiked to 12.3 percent in the fourth quarter, compared with 7.8 percent at the end of 2007. CB Richard Ellis”™s and Newmark Knight Frank”™s research was closer in their measure of net space absorption in downtown White Plains, with Newmark Knight Frank reporting about 261,000 square feet of additional unoccupied space at the end of 2008.
At Jones Lang LaSalle, analysts reported a fourth-quarter decrease in the vacancy rate for class-A buildings in Westchester, from 20.2 percent in the third quarter to 18.8 percent. The end-of-year vacancy rate at class B buildings rose to 13.9 percent from 12.8 percent in the third quarter. In the White Plains CBD, the year-end class-A vacancy rate was 21.3 percent, up only 0.1 percent from the third quarter, Jones Lang LaSalle reported.
Aggregate leasing activity in Westchester through 2008 dropped 19 percent from year-end 2007, CBRE reported. As recession-minded tenants delayed decisions on long-term leases and renewals, leasing volume in the fourth quarter was down 35 percent from the third quarter. The White Plains CBD “had another difficult leasing quarter,” CBRE analysts said, accounting for 16.5 percent, or 61,300 square feet, of the county”™s fourth-quarter leasing velocity.
The average asking rent in the county was $28.05 per square foot at the end of 2008, a decline of 3.4 percent since year-end 2007, CBRE reported. The White Plains CBD continued to have the highest asking rents, ending 2008 at $29.97 per square foot, a 1-percent drop from the previous quarter.
However, analysts at Newmark Knight Frank said the county”™s average asking rent continued to rise in 2008, ending the year at $29.50 per square foot, up 2 percent from the $28.91 average at year-end 2007. Jones Lang LaSalle reported an average fourth-quarter asking rent of $30.83 per square foot for class-A buildings and $25.54 per square foot for class-B buildings.
CBRE analysts said office landlords in Westchester have shown a greater willingness to renegotiate rents and are offering larger concession packages in the changing market.
CBRE analysts said leasing activity in Westchester was down 19 percent in 2008 from the previous year, a lesser slump than in other markets in the region, where leasing declines of nearly 40 percent have been reported since 2007. The average deal size of 6,738 square feet in 2008 was almost unchanged from year-end 2007 in Westchester.
The county”™s diverse tenant base should keep the office market stable overall through the economic upheaval, analysts at the real estate brokerages agreed. “The county”™s close proximity to Manhattan ensures a steady trickle of activity from space users,” said Edward Tonnesen, executive managing director of brokerage at the Jones Lang LaSalle office in Stamford, Conn. “The average tenant size is smaller so any one gain or loss does not impact the vacancy rate very much.”
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