Westchester”™s somnolent commercial office market showed little sign of stirring in the second quarter, when leasing activity dropped sharply from the previous three months and even more steeply from the second quarter of 2009, according to real estate companies here.

Second-quarter deals largely were limited to leases of 10,000 square feet and under. Market analysts at RHYS Commercial Real Estate in Stamford, Conn., said most tenants opted to renew or extend their leases in the slow-recovering economy, though several expansion deals in the recently ended quarter signal that companies are preparing for long-term growth.

Cushman & Wakefield said new leasing at both class-A and class-B office buildings in the county totaled approximately 192,000 square feet, declining 35.4 percent from the first quarter.

Second-quarter leasing at class-A buildings totaled 141,188 square feet, a 45 percent decrease from the previous quarter and a nearly 40 percent drop from the second quarter of 2009.

Cushman & Wakefield said the county”™s eastern submarket, which extends east to Long Island Sound from the I-287 office-park corridor in White Plains and Harrison, accounted for about 37 percent of the quarter”™s total class-A leasing.

RHYS reported new leases and renewals in the second quarter totaled 300,317 square feet of space, a 33.4 percent decline from the first quarter and a 42.5 percent drop from a year ago.

Rents hold steady
Across most of the county, second-quarter asking rents held steady or dropped only slightly from earlier this year.

Newmark Knight Frank said the overall asking rent averaged $26.81 per square foot, compared to $27.02 in the first quarter. Landlords, though, were asking less than a year ago, when the second-quarter average was $29.19 per square foot, according to NKF.

Cushman & Wakefield said asking rents for class-A space showed little change at $31.51 per square foot, compared to $31.59 in the previous quarter and $31.29 per square foot in the second quarter of 2009.

Rental rates in the White Plains central business district remain the highest in the county, rising in the second quarter to $33.26 per square foot for class-A space from $32.40 in the first quarter. Cushman & Wakefield brokers said the rise is due chiefly to the addition of the newly built 7 Renaissance Square, a 68,418-square-foot building, to the downtown market.

Availability rate rises
Westchester”™s overall office-space availability rate rose by about 1 percent from the first quarter.

Newmark Knight Frank reported 24.5 percent of the county”™s total office inventory of about 27.46 million square feet was available in the second quarter, compared to 23.2 percent in the first quarter and 22.4 percent a year ago.

Cushman & Wakefield said about 125,400 square feet of class-A space was added to the market in the second quarter. Sublease space accounts for 14.1 percent, or about 648,000 square feet, of available class-A space.

In the county”™s eastern submarket, available class-A space totals some 1,151,000 square feet, nearly 19 percent of which is sublease space, according to Cushman & Wakefield.

Cushman & Wakefield reported a countywide second-quarter vacancy rate of 17.9 percent for class-A and class-B office space, only slightly higher than first-quarter vacancies.

Newmark Knight Frank reported a positive net absorption of 99,104 square feet of available space in the second quarter, compared to negative absorptions of 72,242 square feet in the previous quarter and 58,532 square feet in the second quarter of 2009.

James Fagan, senior managing director at Cushman & Wakefield and head of its Westchester and Fairfield County, Conn., operations, in a prepared statement said his company expects to see the office market improve in the second half of this year, based upon a second-quarter gain of 500 jobs in the county.

“We believe that this quarter”™s job creation, albeit small, indicates the end to the downward slide we”™ve been experiencing in Westchester County,” he said.

 

2Q Big Deals

Brokers noted these exceptions in a slow quarter dominated by small-sized deals:

• Nextel of New York, 50,379-square-foot renewal at 565 Taxter Road, Elmsford.
• Addison Wesley Longman, 43,997-square-foot blend-and-extend deal at 10 Bank St., White Plains.
• Standard Life Insurance Co., 33,785-square-foot renewal at 360 Hamilton Ave., White Plains.
• Kaufman Borgeest & Ryan L.L.P., 32,687-square-foot expansion and extension at 200 Summit Lake Drive, Valhalla.
• McCarthy Fingar L.L.P., 20,000-square-foot renewal at 11 Martine Ave., White Plains.
• HRH Construction L.L.C., 19,500-square-foot new lease at 11 Martine Ave.