WHITE PLAINS, NY—The adaptive reuse of aging former officebuildings into healthcare facilities, laboratories and researchcenters has stimulated activity in what has otherwise been alackluster, but slightly improving office market in WestchesterCounty, according to research from ColliersInternational obtained exclusively by GlobeSt.com.

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The brokerage firm notes that even with office rents essentiallyflat, the Westchester County office market did see positiveabsorption for the first time in a year in the third quarter, andwhile current job growth is not strong enough to spark afull-fledged office market rebound, the outlook for leasingvelocity is “cautiously positive.”

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“There is real strength in the local Westchester economy, fueledin particular by the healthcare sector, but also with improvedactivity in energy, high tech, and education,” says AlGutierrez, executive managing director of ColliersInternational in Stamford, CT. “The overall job growth is positivefor the county, and there has been increased leasing velocity inthe office market. But competition from Fairfield County and NewJersey and densification by occupiers are keeping office activityin check.”

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After four consecutive quarters of negative absorption,Westchester County delivered 204,506 square feet of leasing in thethird quarter, with four of the five submarkets showing positiveactivity. Northern Westchester was the strongest submarket, with an8.9% availability rate, above the 10.7% both in the second quarterand a year ago. Westchester's overall availability rate was 18.4%at the end of the third quarter, down from 18.9% in the secondquarter, but up from the 17.7% rate a year ago.

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Overall Westchester County asking rents averaged $26.12per-square-foot at the end of the third quarter, up marginally from$25.99-per-square-foot in the second quarter and$25.35-per-square-foot a year ago.

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The surging healthcare sector in Westchester is buoying theoffice market, adding approximately $1 billion in capitalinvestment in the county's healthcare infrastructure of late.Healthcare is now the county's second largest employer, accountingfor 17% of its workforce, according to the Westchester CountyAssociation.

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Colliers officials note that while the conversion of outdatedoffice stock to healthcare uses did not have a statisticallysignificant impact on fundamentals in the third quarter, thelong-term trend continues to reshape the overall Westchesterbusiness sector.

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Most recently, Arizona-based REIT Healthcare Trust of AmericaInc. purchased five buildings comprising the Westchester MedicalCampus at 220-244 Westchester Ave. in Harrison, gaining 188,500square feet on 14 acres with pre-approval for an additional71,700-square-foot building to be constructed on the site. Also,Harrison Executive Medical Park's owners are adding a fourthbuilding to house the growing Westmed Medical Group in 85,000square feet of new space.

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Other evidence of a burgeoning healthcare sector is the recentopening of Memorial Sloan Kettering's $128.8-million conversion ofthe 500 Westchester Ave. office building in West Harrison into acancer center facility for outpatient treatment. Eastview HoldingsL.L.C. is currently requesting a zone change for approximately 100acres at the Landmark at Eastview complex in Greenburgh to bedeveloped in two phases. This project would bring a 110-room hotel,bank, retail stores, and a four-story, 128,000-square-foot medicalresearch and development office linking it into the existingbiotech office campus that houses Regeneron PharmaceuticalsInc.

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John Jordan

John Jordan is a veteran journalist with 36 years of print and digital media experience.