NORTHEAST SNAPSHOT, FEBRUARY 2005

Westchester County Office Market

During the nation’s recent economic downturn, New York’s Westchester County found its office market dealing with high vacancy rates and limited activity. However, in 2004 there was significant recovery in the market and conditions have steadily improved.

“The Westchester market has a vacancy rate that is just under 14 percent,” says Sal Carrera, director of the Westchester County Office of Economic Development. “That is almost the lowest rate in the past 4 or 5 years. The market had been in the upper teens for many years, but it is doing very well now.”

Businesses throughout New York and in bordering towns in Connecticut are finding the reasonable rates that exist within Westchester County to be attractive alternatives to those in more established markets such as New York City or Greenwich, Conn. “The typical rental rates in Westchester County are in the mid- to high $20s,” Carrera says.

There are many quality properties in Westchester, and the Office of Economic Development can assist businesses seeking to enter, or relocate within, the county. Increases in leasing velocity and less negative absorption are responsible for the improved statistics over the past year. And there is no reason that the office market’s fortunes will not continue to increase in 2005. Although, according to Carrera, there is very little office development occurring in this crowded market — the county houses 32 million square feet of existing office space — one major mixed-use development is making an impact.

“The city of White Plains is constructing more than 2,000 apartments units and has just completed a new downtown retail center called the City Center, with 500,000 square feet of entertainment and retail,” explains Carrera. This new development activity is spurring interest from businesses and, coupled with the city’s already improving office market, White Plains is poised to experience increased activity in coming months. The White Plains central business district is an up-and-coming area for office activity, notes Carrera. “The CBD’s vacancy rate in 1998 was 30 percent. It is now down to 14 percent.”

Three major corporations maintain offices in the county. IBM has a large presence in various cities; Pepsi and MasterCard occupy offices in Purchase, Harrison and Somers.

Other companies are actively seeking and finding properties throughout Westchester. Two new companies have moved into Westchester and established offices, and a number of businesses have relocated within the county from existing spaces. Nokia recently purchased a 105,000-square-foot building in Harrison, and Triarc Companies, the franchisor and owner of more than 200 Arby’s restaurants, moved its headquarters from New York City to Rye Brook. Dannon Company has moved its Westchester operations from Tarrytown to a 55,500-square-foot facility in Greenburgh, and Lillian Vernon Corporation has relocated to 52,712 square feet in White Plains.

Major brokers in the area include Reckson Associates, Mack-Cali Realty Corporation and the RPW Group, a new player in the market that has just purchased the 600,000-square-foot former Philip Morris headquarters in Rye Brook, which it is going to try to subdivide and fill with smaller tenants.

Carrera forecasts a successful coming year for the county’s office market, most notably because of competitive rates, improving economics and the region’s strong population.

“I think that the market will continue to perform strongly,” he says. “Three out of five workers in the county live in the county, as well. There is a strong link between people that live here and people that work here.”

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