With its location and enviable demographic, Westchester County should appeal to businesses seeking to relocate. It does not always play out that way amid a swirl of forces ranging from interstate job poaching to the stock market to “the new normal.”
“We”™re getting what we always get,” said Howard E. Greenberg, president of White Plains-based Howard Properties Ltd. and a 23-year veteran of representing tenants. “We tend to get smaller, privately held companies and law firms. Much of the relocation we see is intracounty: rearranging the deck chairs with not a lot of positive absorption for the county. In my opinion as a broker and a tenant representative, we”™re not getting our due.”
Greenberg cited the post-9/11 market as an example: $100 per-square-foot space in Manhattan vs. “in the $30s for Westchester”™s finest buildings,” yet there was little aggregate gain.
“There are still businesses to this day that need the cachet of a Manhattan address,” Greenberg said. “And if they do move, they often skip Westchester and go to Connecticut.” While not a Manhattan-Connecticut move, he noted Starwood Hotels will leave White Plains for Connecticut at a tax-break cost to Connecticut of $95 million or $112,000 per job for 800 jobs.
Westchester County should, according to Greenberg, prove a reliable magnet for Manhattan firms”™ administration staffs and perhaps for key players, too, as was the case with White Plains moves for Wilson, Elser, Moskowitz, Edelman and Dicker L.L.P. to Gannett Drive and for Alliance Bernstein Mutual Funds to North Lexington Avenue. He called the absence of such a cost-saving measure in good times “counterintuitive.”
But in what he calls “the new normal,” Greenberg said, “Part of the problem now is the Manhattan market is soft. And moving remains a significant expense. For the landlords, it”™s worse to have vacant space than to do no deal, so they”™re doing everything they can to keep tenants. No one wants vacant space in this market.”
John McCarthy is president of White Plains-based McCarthy Associates. In his office, if the celebration was planned for a turnaround next year, the noisemakers are back in their boxes.
Â
“What we”™re seeing over the last six months is internal movement in Westchester with the likes of Malcolm Pirnie Inc. and Reader”™s Digest,” McCarthy said. “None of this is absorption. They”™re downsizing: Malcolm Pirnie by 25,000 to 30,000 square feet and Reader”™s Digest from almost 300,000 square feet to 142,000 square feet. We”™re not making positive gains on absorption.”
Â
That negative absorption has afflicted both Westchester and Fairfield (Conn.) counties for the past two years, he said. He envisioned the downslide “probably will start to level off in the first quarter of 2012.” That estimate has retreated from what he thought would be a first-quarter leveling off in 2011.
“This is no different than what happened in the 1980s (the banking bust) and the 1990s (the dot-com boom-bust), except this is collective, not exclusive,” McCarthy said. “And it”™s stretching out.”
In a region that is heavily stock market-centric, McCarthy said it is paychecks that matter most.
“Westchester and Fairfield are focused on the Dow,” he said. “What happens is we tend to focus on the Dow, but what you have to focus on is unemployment. It”™s not the 10 percent being reported; it”™s more like 16 (percent) or 17 percent. If you look at the companies laying off, of the larger companies, is there growth? To a T, there”™s nothing going on.”
With three weeks on the job, Larry Gottlieb is Westchester County”™s director of economic development. He classifies the current climate as a “restrained recovery,” saying, “We”™re in a recovery, but businesses are holding back on investments and on making significant numbers of hires. We need to set the table for success via things we can do.”
Toward that end, Gottlieb said, “We have to better market the county both internally and externally. If someone starts a business in a garage in Westchester and they want to expand, they don”™t want to leave. Everything they need to thrive and grow is right here.” Formidably, the region possesses education in abundance, a point not lost on Gottlieb, who is organizing a forum to be held at the county executive”™s office featuring business, government and academic leaders.
“Economic development is most successful if academia is aligned with business and government; it acts as a feeder,” Gottlieb said. He points out that when jobs leave New York ”“ he cited the Carolinas as a magnet for such exoduses ”“ they take with them “our significant collective investment in intellectual capital and transport that capital to places that do not invest as heavily in education.”
Gottlieb said it is critical to foment success early, when workers are starting families and careers. “In order to complete the loop, we”™ve got to start them the right way. If we”™re doing everything right, they”™ll stay.”
