WHITE PLAINS-Despite some concerns over the turbulent credit markets that caused a slowdown in the commercial office market this year, most brokers and building owners who participated in the third annual RealShare Westchester conference here on Wednesday said they expect rental rates to go up in most markets around the county in 2008. The market that will continue to be tight and see rents go higher is Downtown White Plains, a majority of panelists predicted at the event held at the Crowne Plaza here. RealShare was a presentation of Real Estate Media, parent company of GlobeSt.com and sister publications Real Estate Forum and Real Estate New York.

The talk of the conference was Frank Kenny, CEO of the Willett Cos. of Rye, who offered a rather dour assessment of the Westchester County office market going forward. He said that most New York City-based companies, especially financial services firms and hedge funds, need to be close to train stations and are willing to pay the extra rental costs in Greenwich, CT, instead of locating at cheaper space in suburban office parks along I-287 in Westchester County. The Willett Cos. executive, whose firm owns four office properties in Greenwich and some suburban space in Rye, and Millwood, went on to say, “I have innate concerns about the Westchester office market. We are really not seeing substantial rental growth.” Kenny was a panelist at the “Town Hall Meeting: The State of the Westchester County Market” roundtable discussion.

A number of participating commercial office brokers and building owners at RealShare differed with Kenny’s assessment of the markets. Jeffrey Newman, EVP of W&M Properties and fellow panelist at the Town Hall session, said he is seeing rent growth in certain markets and in certain niches in the market. Newman, whose firm owns office buildings in Downtown White Plains as well as in suburban campus like settings on Westchester and Mamaroneck avenues, noted that his firm recently signed 36,000 sf of tenant expansion lease deals with investment companies that came to Westchester from Manhattan. Due to demand, the firm has added a second shuttle from its Mamaroneck Avenue properties to the Mamaroneck train station to accommodate its mainly financial service tenants’ reverse commute needs.

He said that his firm’s rents are rising in both its suburban and White Plains CBD assets. “There are niches in the market and there has been rent growth for us.” Some of his firm’s suburban campus properties are now seeing rents in the low $30s per sf, while in Downtown White Plains W&M and other building owners near the train station have seen rents raise from $32 a sf to more than $40 a sf with little tenant improvement.

Newman acknowledged that there are some buildings in Westchester achieving rent growth while other properties are not. “It’s been like you are Rip Van Winkle, you wake up 20 years later and you are still getting $25 a sf,” he said. Newman contents the buildings where ownership has invested significant capital to upgrade their properties to class A will continue to achieve rent growth in 2008.

Those sentiments were also shared by those who participated in “The Prospects for Leasing, Investment & Development Panel,” chaired by GVA Williams of Connecticut president and CEO Cory Gubner. Both Joseph Caruso, SVP of RexCorp Realty, and Jeff Warner, VP of leasing at Mack-Cali Corp., said that their respective firms have experienced similar leasing activity as compared to last year despite the slowdown caused by the trouble in the financial markets. Both also said that their firms are seeing strong interest from New York City firms who are studying the Westchester office market. They also agreed that quality buildings, especially those near transportation, would be the cream of the crop in 2008.

Brian Carcaterra, director of Newmark Knight Frank’s Westchester/Connecticut office, said, “I think there are two markets in Westchester County–an A market and a B market.” He later predicted, “I think the A market will continue its upward hike in rental rates. …The B market, the product that has not been improved…will continue to struggle and will be in the $25 to $28 a sf range.”

He says that in the past two to three years, rents in class A buildings have risen from $26 a sf to the mid $30s on the east side of Westchester Avenue and to the mid $40s per sf in Downtown White Plains.

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