Strengths and weaknesses became more evident in the Westchester commercial real estate market during 2020 according to data in a report released this morning by real estate brokerage Houlihan Lawrence.
The report noted that effects of the Covid-19 pandemic accelerated existing trends in the market with multifamily and industrial/flex sectors doing well while office and retail vacancies continued to rise and investment sales hit a brief lull.
“The pandemic has had a profound effect on corporate cultures and individual priorities,” said Tom LaPerch, director of Houlihan Lawrence Commercial.
“Companies have realized that business objectives can be accomplished in a more flexible operating environment if a culture of productivity and shared goals is preserved. Individuals have discovered the benefits and weaknesses of working from home as compared to a traditional work setting.”
LaPerch said that it”™s becoming clearer that Westchester is likely to benefit from companies and individuals taking second looks at their commitments to New York City.
“Corporations and individuals are resetting their priorities with regards to location of work, length of commute and financial obligations versus benefits that are attached to different decisions. The result of these important assessments and their impact on commercial real estate will begin to crystalize during 2021,” LaPerch said.
The report said that Westchester multifamily residential buildings are maintaining 96% occupancy, despite a 1% to 1.5% increase in vacancies during 2020. Houlihan said that the demand remains strong and it does not see major difficulties in the market ahead.
It did suggest that some developers of new projects might be considering rethinking their mix of apartments with a view toward leaning slightly in favor of larger units instead of the studio and one-bedroom units designed to attract millennials.
The Houlihan Lawrence report found that the supply of Westchester office space exceeded demand during the fourth quarter of 2020, with an additional 1% of office stock becoming vacant.
Sublet leasing helped keep some space from going vacant, but Houlihan said that leasing in general was weak as few tenants felt confident enough in their office space needs to either expand or take new space. The report said Houlihan was beginning to see some landlords increasing term flexibility in order to attract tenants.
Reported retail vacancies rose by 1.1% for 2020. Houlihan noted that many restaurants, fitness centers and personal service businesses are fighting for survival.
The Houlihan Lawrence report saw demand for industrial and flex space continuing to escalate with lease prices going up. It forecast a recovery in the real estate investment market during 2021 as the heath crisis subsides and investors contemplate a period of low interest rates, economic recovery and political continuity.
