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News release

STAMFORD, CT

Westchester County Posts Another Quarter of Rising Leasing Activity

County recorded 50% increase in leasing activity in 2nd quarter of 2015 after posting 70% boost in deal volume the previous quarter


Stamford, Conn., July 28, 2015JLL reported that Westchester County continued to enjoy a surge in leasing activity in the second quarter of 2015. The boost in deal volume began in the first quarter of the year, when the county posted the largest amount of leasing activity the market had seen in nearly two years.

"Westchester County has entered a transformative period that will improve the quality and competitiveness of much of its office market," said Chris O'Callaghan, Managing Director and Westchester County market lead for JLL. "Developers have already repositioned numerous former office buildings and are approaching municipalities for change of use zoning approval for several others, all with space efficiency top of mind. In addition, transit-oriented development continues to be the main focus of many new projects, as employers are increasingly concerned with ease of transportation for employees."

Year-to-date, leasing activity in Westchester County increased significantly each quarter. The county recorded 731,048 square feet in transactions in the second quarter of 2015, a 50 percent increase compared with the 488,474 square feet leased in the previous quarter. Deal velocity in the first quarter of 2015 was 70 percent higher than the 286,104 square feet in transactions completed at year-end 2014.

Although deal volume remains on the upswing, Westchester County still witnessed 343,585 square feet in negative absorption this quarter, mainly due to PepsiCo Inc. vacating its long-time home at 1 Pepsi Way in Somers. The move fueled negative absorption of 212,658 square feet in the Westchester North submarket alone at mid-year 2015. PepsiCo was also responsible for the two largest transactions completed at mid-year 2015. The food and beverage giant took 222,626 square feet at 1111 Westchester Avenue and 138,555 square feet at 1129 Westchester Avenue, both in White Plains.

The top 10 transactions in Westchester County, by square footage, were evenly split between renewals and relocations this quarter.

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 to 22.1 percent in the second quarter of 2015, a year-over-year increase of 7.3 percent (or 1.5 percentage points) from 20.6 percent. The county's Class A vacancy rate grew to 24.6 percent this quarter, a year-over-year increase of 9.8 percent (or 2.2 percentage points) from 22.4 percent.

Year-over-year, overall rents in Westchester County fell to $24.28 per square foot at mid-year 2015, a decrease of 5.5 percent from $25.69 per square foot. Year-over-year, the county's Class A rents dropped to $25.44 per square foot this quarter, a decrease of 4.4 percent from $26.60 per square foot.

White Plains CBD
Although Westchester County's suburban markets continued to draw the majority of interest from tenants, the White Plains CBD recorded its share of transactions, most of which were for spaces smaller than 10,000 square feet. Prudential Financial Inc. completed the largest lease of the second quarter of 2015, taking 16,197 square feet at 360 Hamilton Avenue in White Plains. The insurance, legal and financial services sectors accounted for 20 percent of all leasing in the submarket this quarter.

The Class A market remained strong despite limited leasing activity. Year-over-year, however, the vacancy rate increased slightly due to several larger tenants moving out of the city which resulted in negative absorption of 41,415 square feet for the quarter. Activity within the submarket's Class B product fueled a drop in overall vacancy rates to 24.7 percent in the second quarter of 2015, a year-over-year decrease of 2.4 percent (or 0.6 percentage points) from 25.3 percent. Year-over-year, the submarket's Class A vacancy rate rose marginally to 25.4 percent this quarter, an increase of less than 1.0 percent (or 0.1 percentage points) from 25.3 percent.

Year-over-year, overall rents in the White Plains CBD fell to $26.81 per square foot in the second quarter of 2015, a decrease of 2.3 percent from $27.43 per square foot. Year-over-year, the submarket's Class A rents dropped to $29.04 per square foot this quarter, a decrease of less than 1.0 percent from $29.27 per square foot.

I-287 Corridor
The I-287 Corridor remained one of the strongest submarkets of Westchester County in the second quarter of 2015. With easy access from major highways, the I-287 East Corridor and I-287 West Corridor boast many of the county's most desirable office assets. Combined, the two submarkets accounted for 24.8 percent of all leasing activity in Westchester County this quarter.

In the three largest transactions along the I-287 Corridor this quarter retail and wholesale baker Vie De France Yamazaki Inc. signed for 24,678 square feet at 525 Executive Boulevard in Elmsford (I-287 West); tile and mosaic manufacturer Walker & Zanger Inc. took 21,764 square feet at 36 Midland Avenue in Port Chester; and accounting firm Marks Paneth LLP leased 19,939 square feet at 4 Manhattanville Road in Purchase (both in I-287 East).

Despite strong leasing activity, the submarket recorded year-to-date negative absorption of 70,000 square feet year-to-date and stagnant vacancy rates as several tenants relocated out of the market. Year-over-year, the overall vacancy rate in the I-287 East Corridor marginally rose to 17.8 percent in the second quarter of 2015, an increase of less than 1.0 percent (or 0.1 percentage points) from 17.7 percent. The submarket's Class A vacancy rate remained unchanged at 18.6 percent this quarter.

Year-over-year, overall rents in the I-287 East Corridor rose to $25.67 per square foot in the second quarter of 2015, an increase of 1.7 percent from $25.25 per square foot. Year-over-year, the submarket's Class A rates grew to $25.88 per square foot this quarter, an increase of 2.4 percent from $25.27 per square foot.

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JLL is a leader in the New York tri-state commercial real estate market, with more than 2,000 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 investment sales transactions valued at more than $5.4 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. A Fortune 500 company 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 $55.3 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.