STAMFORD, CT—JLL says that in the first quarter of this year, Westchester County experienced 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 firm says in its quarterly activity report.

“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 the 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% in the first quarter of 2015, an increase of 1% (or 0.2 percentage points) from 20.8%t one year earlier. The county's class A vacancy rate grew to 23.1% this quarter, an increase of 1.8% from 22.7% 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% 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% from $27.37 per square foot in the first quarter of 2014.

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% 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% of all leasing in White Plains this quarter.

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% 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; and Alpine Woods Investment taking 22,415 square feet at 2500 Westchester Avenue in Purchase.

The overall vacancy rate in the I-287 East Corridor rose to 18.4% in the first quarter of 2015, an increase of 2.2% (or 0.4 percentage points) from 18.0% one year earlier.