Westchester County”™s commercial office market showed little momentum in the third quarter of 2012.
According to a report by Jones Lang LaSalle, vacancy rates and average asking rental rates remained stable. The overall vacancy rate rose slightly to 18.9 percent, an increase of 1.1 percent from the last quarter, while Class A vacancies decreased by .1 percent year-to-year to 20.2 percent.
Leasing activity also yielded little change. The county saw 390,000 square feet of space leased in the third quarter versus 372,000 square feet for the same period a year ago. Leasing volume year-to-year has been cut in half, from 2.1 million square feet to 1.2 million square feet.
“While there are some pockets of strength, the Westchester office market is still challenged with slow demand and weak velocity,” said Robert Ageloff, international director and head of Jones Lang LaSalle”™s Stamford office, in a press release. “Whatever activity there has been has become a game of musical chairs, where some tenants are trading up while others are trading down, and all the players are leaving equal or greater vacancy in their wake. Furthermore we are seeing a significant uptick in companies seeking government incentives.”
Vacancy figures by CBRE Group Inc. show similar numbers, with an overall vacancy rate of 17.5 percent, compared to 16 percent a year ago.
The size of the deals also remained sluggish. CBRE reported an average deal size of 4,742 square feet this year, compared to 4,557 square feet in 2011.
According to a report by Newmark Grubb Knight Frank, only nine deals larger than 10,000 square feet closed during the quarter. The wholesale and retail industry led with 39.7 percent of all deals over 10,000 square feet, followed by financial services with 31.2 percent, and the government sector with 12.7 percent of total significant deals.
The report also showed that rental rates are decreasing while the availability rate is increasing. The availability rate reached a record high of 23.2 percent at the end of the quarter, up from 22.6 percent in the second quarter and 22.4 percent one year ago.
Newmark Grubb Knight Frank also reported that more property has become available than has been leased. The firm measured that the county had a net lease rate of ”“ 246,360 square feet, which marked the seventh consecutive quarter with a negative amount and brought the year to year net total for the market to -664,118 square feet.
