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| Cushman And Wakefield Release 1Q 2011 Office Market Report Westchester.com Rye Brook, NY - Cushman & Wakefield released its first quarter 2011 report for the Westchester County office market, indicating a slight drop in the overall vacancy rate and positive overall absorption for Class-A space. Countywide, however, leasing activity and rental rates fell slightly during the quarter. The overall vacancy rate in Westchester County in the first quarter registered 16.7%, a slight drop from the year-end 2010 figure of 17.1%. The number is significant in that Westchester County’s overall vacancy rate has increased since the first quarter of 2006, from 14.8%, to a year-end 2010 high of 17.1%. Class-A overall vacancy steadily decreased over the last year by at least one percentage point in five out of six Westchester submarkets. The only increase in Class-A overall vacancy was in the Central submarket, primarily due to 59,000 square feet (sf) of sublease space at 520 White Plains Road in Tarrytown added to the market by Westcon. Since the first quarter 2010, the Southern submarket experienced the largest drop in Class-A direct vacancy when it fell 34% from 23.6% to the current rate of 15.5%. The decrease was attributed to the conversion of 1000 Main Street in New Rochelle to an owner-occupied building purchased by Tudor-Perini Construction. The market continued to show anemic leasing activity with a Class-A overall number of 213,811 sf leased in the first quarter as compared with 234,393 sf in the first quarter of 2010, and 229,449 sf at year-end 2010. In the White Plains CBD, 44,732 sf of Class-A space was leased, a considerable drop from 58,086 sf leased in the first quarter of 2010 -- but slightly higher than the 42,530 sf leased in the fourth quarter of 2010. The Eastern submarket had the greatest increase in activity with 101,002 sf of Class-A space leased in the first quarter. “Although leasing velocity is somewhat slow, the path to revitalizing the commercial real estate market is rarely a straight line,” said Jim Fagan, senior managing director and head of Cushman & Wakefield’s Fairfield and Westchester County region. “As a matter of fact we see current leasing activity in the Westchester marketplace to be fairly robust and expect the balance of the year to finish strong. There will be some bumps along the way but the prevailing wisdom believes that the market will be improving for the next two years. We have clearly survived the worst part of the cycle and are in an uptrend.” Guggenheim Partners’ 31,142-sf lease at 4 Manhattanville Road in Purchase was the largest contributor to the leasing activity. Other notable deals in the county this quarter included Disney Publishing Worldwide’s 10,277-sf lease expansion at Westchester One in White Plains; Broadrock Management’s 10,098-sf sublease at 120 White Plains Road in Tarrytown; and Hitachi Metal’s 24,328-sf renewal at 2 Manhattanville Road in Purchase. While overall asking rental rates countywide have remained in excess of $30 per square foot (psf), certain submarkets have fared better than others. Because of building quality and proximity to the train station, a number of Class-A buildings in the White Plains CBD have consistently commanded higher rents -- generally above the $30-psf watermark than similar properties elsewhere in Westchester County. Overall Class-A direct rents registered $30.11 psf, a drop from $30.47 psf at year-end and $31.11 psf in the first quarter 2010. At $33.00 psf, the White Plains CBD still leads the county with the highest Class-A direct rental rate, but it has steadily decreased at a rate of 2.2% since the 2007 market peak. With direct average rents of $41.50 psf, One North Lexington Avenue in downtown White Plains commands the highest rent in the county, pushing the submarket’s Class-A average almost $2.00 psf higher than five years ago. Absorption, one of the indicators used to see if the market is getting tighter or experiencing a reduction, totaled (positive) +96,625 sf for Class-A direct space -- a significant improvement from the negative numbers of -10,140 sf in the fourth quarter of 2010 and -495,312 in the first quarter 2010. The investment sales market ended 2010 with several smaller transactions completed. The most notable was Faros Properties purchase of 555 Theodore Fremd Avenue, a 166,000-sf building located in Rye. “As has been the case for the past several years, many potential buyers are looking for distressed opportunities where they can purchase long-term assets at lower pricing, and then profit when the market normalizes,” said Mr. Fagan. “Conversely, property owners and lenders will likely remain idle in order to see how quickly the market returns.” |
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