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News release

STAMFORD, CT

Westchester County Witnesses Highest Volume of Leasing Since Early 2013

White Plains CBD posts strongest leasing since 2010, sees vacancy rates drop for all property types in 1st quarter of 2015


STAMFORD, Conn., April 22, 2015 — JLL reported that in the first quarter of this year, Westchester County witnessed the largest amount of leasing activity the market has seen in nearly two years. In another encouraging sign for a market that has posted limited activity for the past few quarters, tenants currently in the market for office space have combined requirements totaling approximately 700,000 square feet.

“The Westchester County office market remained static in the first quarter of the year,” Chris O’Callaghan, Managing Director and Westchester County market lead for JLL. “With no new product coming online, and continued repositioning of older office buildings for adaptive re-use or renovation, rents have stabilized. The flurry of activity the county saw in the final quarter of 2014, with signed leases by Acadia Realty and U.S. Alliance Credit Union and the purchase of 600 Midland Avenue in Rye for the FBI, is a positive sign for the market in 2015.”

Westchester County recorded 488,474 square feet in transactions in the first quarter of the year, marking a whopping 70.6 percent increase in deal velocity compared with the 286,104 square feet leased the previous quarter. Despite the increase in leasing activity, the county witnessed 51,400 square feet in negative absorption this quarter due to space put back on the market at 555 Taxter Road in Elmsford and 1 North Broadway in White Plains. The largest transactions completed in the first quarter of the year include Hudson Health Plan signing for 57,315 square feet at 303 South Broadway in Tarrytown, PURE Insurance Co. leasing 43,948 square feet at 44 South Broadway in White Plains and FedEx taking 36,500 square feet at 669 South Third Avenue in Mount Vernon.

Renewal transactions continued to drive a large percentage of leasing activity in Westchester County in the first quarter, with renewals accounting for nine of the top 10 leases, by square feet. This may be a sign that tenants are beginning to avoid many of Westchester County’s aging office buildings, viewing them as unable to offer any distinct advantages over their current premises. It appears that growing pains also encouraged some companies to tack on expansions to their renewal deals, as nearly one-third of the renewals completed in early 2015 involved expansions. Among the largest such transactions was PURE Insurance lease at 44 South Broadway.

Although Westchester County has approximately 634,000 square feet of new office space under construction this quarter, all of that space is pre-leased. The projects include Regeneron Pharmaceuticals Inc.’s new space at 777 Old Saw Mill River Road in the I-287 West Corridor and 252,000 square feet of space under renovation at 700 Anderson Hill Road in the I-187-East corridor.
Westchester County’s overall vacancy rate rose slightly to 21.0 percent in the first quarter of 2015, an increase of 1.0 percent (or 0.2 percentage points) from 20.8 percent one year earlier. The county’s Class A vacancy rate grew to 23.1 percent this quarter, an increase of 1.8 percent (or 0.4 percentage points) from 22.7 percent in the first quarter of 2014.

Overall rents in Westchester County fell to $24.45 per square foot in the first quarter of 2015, a decrease of 7.5 percent from $26.43 per square foot one year earlier. The county’s Class A rents dropped to $25.40 per square foot this quarter, a decrease of 7.2 percent from $27.37 per square foot in the first quarter of 2014.

White Plains CBD
White Plains CBD recorded the highest leasing velocity in Westchester County for the first time since 2010, posting positive absorption of 45,463 square feet in the first quarter of the year. The submarket accounted for a bit more than 32 percent of all deals closed this quarter. The legal and financial services sectors continue to identify this submarket as a suitable location because of its proximity to the railroad stations, major highways and the county courthouse. These two sectors alone accounted for 55.0 percent of all leasing in White Plains this quarter.

Strong deal velocity at the start of the year helped push down vacancy rates throughout the CBD in all building classes. The overall vacancy rate in the White Plains CBD dropped to 23.7 percent in the first quarter of 2015, a decrease of 8.1 percent (or 2.1 percentage points) from 25.8 percent one year earlier. The submarket’s Class A vacancy rate fell to 24.6 percent this quarter, a decrease of 5.0 percent (or 1.3 percentage points) from 25.9 percent in the first quarter of 2014.

Overall rents in the White Plains CBD fell to $26.27 per square foot in the first quarter of 2015, a decrease of 8.5 percent from $28.72 per square foot one year earlier. The submarket’s Class A rents dropped to $28.01 per square foot this quarter, a decrease of 8.2 percent from $30.50 per square foot in the first quarter of 2014.

I-287 Corridor
Westchester County continued to see sustained strength along the I-287 Corridor in the first quarter of 2015. Combined, the I-287 East Corridor and I-287 West Corridor accounted for 40.9 percent of all leasing activity this quarter. The I-287 Corridor is host to many of the premier assets in Westchester County and both submarkets are very accessible from major highways.

The largest transactions along the I-287 Corridor this quarter included Hudson Health Plans signing for 57,315 square feet at 303 South Broadway in Tarrytown (I-287 West Corridor); and Alpine Woods Investment taking 22,415 square feet at 2500 Westchester Avenue in Purchase, and Henningson, Durham & Richardson leasing 14,872 square feet at 711 Westchester Avenue in White Plains (both in the I-287 East Corridor).

The overall vacancy rate in the I-287 East Corridor rose to 18.4 percent in the first quarter of 2015, an increase of 2.2 percent (or 0.4 percentage points) from 18.0 percent one year earlier. The submarket’s Class A vacancy rate remained unchanged at 19.1 percent this quarter.

Overall rents in the I-287 East Corridor fell to $25.04 per square foot in the first quarter of 2015, a decrease of 5.0 percent from $26.36 per square foot one year earlier. The submarket’s Class A rates dropped to $25.15 per square foot this quarter, a decrease of 4.7 percent from $26.40 per square foot in the first quarter of 2014.

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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 2014, the New York tri-state team completed approximately 22.8 million square feet of lease transactions, arranged capital markets transactions valued at more than $3.0 billion, managed projects valued at $7.6 billion, and oversaw a property management, facilities management and agency leasing portfolio exceeding 163 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 $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $53.6 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.