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News release

STAMFORD, CT

Westchester County Office Market Remains Steady in 4th Quarter of 2014

I-287 East Corridor, I-287 West Corridor claim 81.3% of leasing activity in final quarter of year


STAMFORD, CT, January 30, 2015 — JLL reported that the lack of growth within Westchester County’s legal and financial services sectors continued to mute momentum for the county’s office market. During the past year, vacancy rates continued to inch up and average asking rental rates saw downward pressure throughout the county.

“The Westchester County office market has held steady for quite a while, with little fluctuation in market indicators,” said Chris O’Callaghan, Managing Director and Westchester County market lead for JLL. “The legal and financial services sectors have a strong presence in Westchester and those industries tend to have lengthier lease terms and shy away from adding or cutting jobs in large quantities. While the local economy overall has added jobs, the slow rate of growth is hampering the real estate market’s momentum. This market will remain in a holding pattern until there is significant expansion.”

Leasing activity in Westchester County remained lackluster through the final quarter of 2014, with deal volume down 31.6 percent compared with the previous year. Tenants signed for 1.3 million square feet of office space in 2014, including 286,104 square feet in the fourth quarter, compared with 1.9 million square feet in 2013. Absorption remained negative in 2014 at 225,589 square feet, although that figure was less than half of the 505,255 square feet of negative absorption witnessed in 2013.

The largest transactions completed in Westchester County in the final quarter of the year included Clarfeld Financial Advisors’ 30,000 square feet at 520 White Plains Road in Tarrytown, Acadia Realty Trust’s 29,322 square feet at 411 Theodore Fremd Avenue in Rye and the Legal Aid Society of Westchester’s 26,885 square feet at 150 Grand Street in White Plains.

Renewal transactions continued to drive a large percentage of leasing activity in Westchester County, accounting for 33 percent of the 48 deals signed in the fourth quarter of 2014. Although the healthcare sector fuelled leasing velocity for much of the year, few deals were completed by healthcare firms in the final quarter of the year. There was, in fact, no clear winner in terms of business sectors taking Westchester County office space this quarter.

The only project under construction in Westchester County at year-end 2014 was the 85,000-square-foot 3030 Westchester Avenue in Harrison Executive Medical Park in Purchase. The medical office building has been entirely preleased by Westmed Medical Group.
Westchester County’s overall vacancy rate rose to 20.9 percent in the fourth quarter of 2014, an increase of 3.5 percent (or 0.7 percentage points) from 20.2 percent one year earlier. The county’s Class A vacancy rate grew to 22.9 percent this quarter, an increase of 2.2 percent (or 0.5 percentage points) from 22.4 percent in the third quarter of 2013.

Overall rents in Westchester County fell to $24.51 per square foot in the fourth quarter of 2014, a decrease of 7.6 percent from $26.53 per square foot one year earlier. The county’s Class A rents dropped to $25.54 per square foot this quarter, a decrease of 6.4 percent from $27.30 per square foot in the third quarter of 2013.

White Plains CBD
The White Plains CBD/Railroad submarket took a back seat to the both the I-287 East Corridor and I-287 West Corridor over the past quarter. The submarket witnessed just 73,862 square feet in leasing activity in the final quarter of the year. Major deals included Clarfeld Financial Advisors’ 30,000 square feet at 520 White Plains Road in Tarrytown, the Legal Aid Society of Westchester’s 26,885 square feet at 150 Grand Street in White Plains and Interoceanic Corp.’s 6,263 square feet at 7 Renaissance Square in White Plains.

As was the story for much of the year, deal volume in the White Plains CBD continued to be hampered by a lack of available high-end properties and an excess of functionally obsolete space. The overall vacancy rate in the White Plains CBD rose to 24.5 percent in the fourth quarter of 2014, an increase of 9.4 percent (or 2.1 percentage points) from 22.4 percent one year earlier. The submarket’s Class A vacancy rate grew to 24.9 percent this quarter, an increase of 4.6 percent (or 1.1 percentage points) from 23.8 percent in the fourth quarter of 2013.

Overall rents in the White Plains CBD fell to $26.47 per square foot in the fourth quarter of 2014, a decrease of 8.6 percent from $28.97 per square foot one year earlier. The submarket’s Class A rents dropped to $28.27 per square foot this quarter, a decrease of 5.8 percent from $30.02 per square foot in the fourth quarter of 2013.

I-287 East Corridor
Westchester County continued to see sustained strength along the I-287 Corridor in the fourth quarter. Combined, the I-287 East Corridor and I-287 West Corridor accounted for 81.3 percent, or 203,591 square feet, of all leasing activity in the final quarter of the year. The I-287 Corridor is home to some of the best assets in Westchester County and both submarkets are very accessible from major highways.

The largest transactions of the quarter included Acadia Realty Trust’s 29,322 at 411 Theodore Fremd Avenue in Rye, New York Columbia Presbyterian Hospital’s 22,500 square feet at 155 White Plains Road in Tarrytown and M&T Bank’s 19,700-square-foot sublease at 120 White Plains Road in Tarrytown.

The overall vacancy rate in the I-287 East Corridor fell to 18.9 percent in the fourth quarter of 2014, a decrease of 2.1 percent (or 0.4 percentage points) from 19.3 percent one year earlier. The submarket’s Class A vacancy rate dropped to 19.9 percent, a decrease of 2.5 percent (or 0.5 percentage points) from 20.4 percent in the fourth quarter of 2013.

Overall rents in the I-287 East Corridor fell to $25.00 per square foot in the fourth quarter of 2014, a decrease of 7.5 percent from $27.03 per square foot one year earlier. The submarket’s Class A rates dropped to $25.09 per square foot this quarter, a decrease of 7.1 percent from $27.00 per square foot in the third quarter of 2013.

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JLL is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2013, the New York tri-state team completed approximately 25.9 million square feet in lease transactions, arranged capital markets transactions valued at $2.1 billion, managed projects valued at nearly $7 billion, and oversaw a property and facilities management portfolio of 95.3 million square feet and an agency leasing portfolio of 67.0 million square feet.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $53.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.