Westchester County, New York Office Market

Bordered by the Hudson River and the Long Island Sound, Westchester County in New York State has garnered much attention from major corporations over the past decade, as they’ve looked at this 450-square-mile area for their office space requirements. This trend continued in 2006 with a number of corporate users relocating to Westchester County. As a result, vacancy rates throughout the market dropped to a low 12.2 percent and rental rates climbed over last year’s figures and now range from the low $20s to $38 per square foot. 

Westchester County’s central business district (CBD) in White Plains experienced dramatic rental rate increases during the third quarter of 2006. For the first time, prime buildings in this market achieved rents in excess of $35 per square foot. This is primarily due to a fundamental shift in the White Plains tenant base. Today, White Plains boasts a diversified tenant base, which has stabilized the city’s economy. Consequently, it has also stabilized office occupancy levels. At the core of this reinvigoration is the redevelopment of older office buildings into sleek, modern properties with top-of-the-line amenities. Development of residential housing and hotels has also bolstered real estate activity in the area.

With the exception of significant interest from a major user in a built-to-suit project, ground-up, new development is not currently taking place in the market. The majority of the renovation and redevelopment projects are occurring in the downtown area of White Plains and in the Eastern submarket along I-287. 

In addition to the influx of redevelopment projects throughout White Plains and the Eastern submarket, the market has also experienced terrific leasing activity. Most recently, AllianceBernstein leased 210,000 square feet at One North Lexington Avenue. GuildNet also took 33,347 square feet of space at One North Lexington Avenue and Malibu-Kahlua leased 33,267 square feet at 777 Westchester Avenue. The Eastern submarket saw MCI, Inc. renew its 180,000 square foot lease and Strategies for Wealth Creation and Protection committed to a 40,973 square-foot lease at 800 Westchester Avenue.  

Westchester has also attracted major investment sales players. One of the largest investment sales transactions in the area was the recent $181 million acquisition of Westchester One, the county’s tallest office building, by Boston-based real estate investment firm, Beacon Capital Partners.

During the next 6 to 12 months, availability rates in the key White Plains and Eastern submarkets should continue to drop. With development in prime locations sure to take place as well as a continued influx of new corporate space users coming to the market, the future for Westchester County’s CBD is bright.       

— Paul Jacobs is a senior vice president in CB Richard Ellis’ Stamford, Connecticut office.

©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.

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