Office vacancy rates declined in the third quarter and overall rental rates in Westchester County rose from a year ago, according to Cushman & Wakefield”™s third-quarter report for the Westchester commercial real estate market.
The White Plains central business district and the county”™s eastern submarket accounted for more than 65 percent of leasing activity for the quarter. In the eastern submarket, where Cushman & Wakefield reported 148,159 square feet of space leased, the Bank of New York rented 78,500 square feet at 440 Mamaroneck Ave. in Harrison. In downtown White Plains, where 120,792 square feet of office space was rented, Disney Publishing Worldwide Inc. signed a lease for 60,702 square feet at 44 S. Broadway to relocate its Manhattan headquarters.
Overall vacancy rates across the county dropped to 14.7 percent in the third quarter, down from 16.3 percent a year earlier. Third-quarter leasing was level with the second quarter, according to brokers.
Rental rates rose in nearly every Westchester County submarket. Direct average rent countywide for class A and class B buildings combined was $31.24 per square foot, up 7.4 percent from the previous year.
Direct average rent for class A space countywide was $31.98 per square foot, up from $31.82 per square foot in the second quarter and $30.12 per square foot a year ago. Rent prices climbed because of capital market sales and credit availability, Cushman & Wakefield analysts said. The White Plains central business district had the highest average class A rent at $35.19 per square foot, with some of its 20 Class-A buildings commanding more than $40 per square foot.
Small transactions dominated the third-quarter leasing market, with 65 percent of square footage and 95 percent of transactions involving deals less than 20,000 square feet. Officials at Cushman & Wakefield, however, said a number of lease transactions in excess of 75,000 square feet are expected to close by the end of 2007. They involve businesses relocating from New York City and others moving within the county.
“We expect conditions to improve by year-end and the outlook for the first quarter of 2008 looks particularly strong,” said Jim Fagan, senior managing director and head of Cushman & Wakefield”™s Fairfield County, Conn., and Westchester County region.
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The overall class A vacancy rate for the county was 17 percent, a slight increase from 16.8 percent last quarter. The overall vacancy rate for the county was 14.7 percent, a decrease from 14.8 percent last quarter and 16.3 percent one year ago.
Leasing activity for the quarter came to 402,462 square feet, bringing 2007 activity after nine months to about 1.3 million square feet. Still, overall absorption of available space was a negative 210,206 square feet for the quarter as several large parcels returned to the market, Cushman & Wakefield noted.
Those parcels include 300,000 square feet at 333 Westchester Ave. in White Plains, where Argent Mortgage Company L.L.C., the failing subprime mortgage lender bought by Citigroup Inc. in August, last year vacated 210,000 square feet. Argent last summer also terminated its lease for 325,000 square feet in Westchester One at 44 S. Broadway.
Although the Westchester County investment sales market was not as robust as in 2006, property sales for the third quarter totaled more than $200 million, Cushman & Wakefield reported. In the largest transaction, The Centre at Purchase, a four-building complex on Manhattanville Road in Purchase, was acquired for $166 million, or $268 per square feet. The reported buyers, a New York City partnership of O”™Connor Capital Partners and George Comfort & Sons, have not responded to Business Journal requests to confirm the sale.
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