Brokers Expect Rent Hikes in Westchester, Fairfield

Despite some large space givebacks by the likes of Argent Mortgage, Triarc Cos. and Lillian Vernon in Westchester and UST, Unilever, Xerox and Amaranth Advisors in Fairfield County, real estate executives who participated in a roundtable discussion staged by the Westchester chapter of the Building Owners and Managers Association believe office vacancy rates in the region will fall this year and office rents in the key central business districts will go higher.

Robert Weisz, president and CEO of the RPW Group in White Plains, said at the event held Thursday at the Crowne Plaza in White Plains, that tightening market conditions will help bring about higher rents in Westchester County.

"The $30 [per sf] number will become the number that will be the basis for a class A buildings in Westchester County," he said. In terms of Downtown White Plains, he expects properties to secure $40 per sf and higher there later this year.

Cushman & Wakefield senior managing director James Fagan said the Downtown Stamford and White Plains markets are very tight and will continue to be so for the foreseeable future. He predicts office rent growth of 25% in Stamford and White Plains over the next two years.

C&W's Patrick Colwell said that some investors interested in acquiring properties in Downtown White Plains have factored into their numbers that rents in the CBD will go up 10% each year over the next three years.

Robert Caruso, senior managing director of CB Richard Ellis, said the office market in Westchester and Fairfield will perform well in 2007. "I see rents continuing to be high in the CBD," he said. "I think the growth in the non-CBD will be slower."Caruso added that Westchester tenants will have opportunities outside of the White Plains CBD, noting that some landlords in those markets might be willing to do deals and undercut their competitors to fill space.

Most of the panelists believe that some major relocation deals could come out of New York City to Westchester this year based on the tremendous growth in rents in Manhattan and tight market conditions there.

However, RPW Group's Weisz contends that most major companies will want to keep their operations in Manhattan and will not see Westchester as a viable alternative.

Weisz predicts that as the office market in Westchester continues to tighten, developers will begin to study new office construction. The developer said he believes a new speculative office project will break ground in the next 24 months in the county.