Brokers Expect Westchester Office Market to do Well

Officials with CB Richard Ellis and Cushman & Wakefield, which recently released fourth office availability reports for Westchester County, note that county performed well in 2004, despite some trying circumstances.

While Cushman's and CBRE's office availability rate numbers do not match, due to differing criteria, both report the percentage of vacant office space in Westchester had risen slightly in 2004. The chief culprits were large corporate givebacks of space, particularly the Altria Group, which vacated and sold its 800 Westchester Ave. complex in Rye Brook (which totals 625,000 sf), Reader's Digest, which sold its corporate headquarters complex in Chappaqua and downsized its space requirements there, and IBM which vacated a large block of space at 1133 Westchester Ave.

However, unlike in past years when corporate downsizing programs battered the Westchester market, both brokerage firms note that the county's office sector held its own in 2004. James Fagan, senior managing director and head of Cushman & Wakefield's Westchester, Fairfield and Long Island offices, says, "All things considered, Westchester County ended up with a very solid year and we will move into 2005 with a substantial amount of leasing activity in the transactional pipeline. We expect a number of significant leases to close in the first half of this year--a strong sign that Westchester continues to move in a positive direction."

Robert Caruso, managing director of CBRE's Westchester/Fairfield region, says that although leasing velocity declined 17% in 2004 as compared to 2003, the slowdown did have an upside. "While mega-transactions and major relocations of companies from outside this market into Westchester always make the statistics look good and testify to its on-going desirability as a business location, the real measure of a market's viability is its ability to sustain itself in years where these events aren't the dominant drivers. Clearly, 2004 was one of those years and it's exciting to see how well Westchester business generated demand and held new availability at bay."

CBRE states the county's office availability rate rose slightly to 13.3% at year's end 2004 as compared to three months earlier. Meanwhile, Cushman & Wakefield reports the county's availability rate rose from 16.3% in the third quarter to 16.8% at the end of 2004.

The revitalization of Downtown White Plains continues to pay huge dividends. CBRE reports that the Downtown district's office availability rate fell almost four percentage points last year to 14.3% by the end of 2004. Cushman & Wakefield has the availability rate in Downtown White Plains a smidge higher at 14.9% at year's end 2004, down from 15.2% the previous quarter.