Westchester, NY, January 10, 2018 – Urban centers of business activity in Westchester County—particularly Downtown White Plains, and the Southern and Eastern submarkets—experienced an increase in office leasing demand and a decline in vacancies in 2017, with tenants increasingly drawn to properties in close proximity to transit, according to Cushman & Wakefield. With office space being absorbed in those submarkets and other properties scheduled for residential and senior living conversion, urban cores are expected to drive Westchester activity in 2018.

Several investments, recommitments, and new leases have also helped propel the broader market, with tenants/occupiers committing to Westchester as a first rate market to conduct business:

  • Sumitomo Mitsui Banking Corporation—with its local hub in New York City—opened a new office in 2017, signing a long-term, 100,107 square-foot lease at 1 North Lexington Avenue in Downtown White Plains.
  • Montefiore Hospital signed a long-term, 281,000-sf renewal and extension at South Westchester Executive Park, recommitting to the area.
  • Regeneron Pharmaceuticals received approval to build nine buildings totaling more than one million square feet, doubling the size of its current corporate headquarters on Old Saw Mill River Road in Greenburgh. This commitment is in addition to their purchase of the nearly 400,000-sf facility in Mount Pleasant, formerly occupied by NY Life.
  • NY Life’s continuance and expansion of their presence in Westchester with their lease and expansion at 44 South Broadway.

There is also increased capital investment in Westchester County.

Harrison:

Five somewhat older and obsolete office buildings totaling more than 500,000 sf on Corporate Park Drive have been demolished with several new developments across property types are taking shape. National residential development company Toll Brothers is in the process of building an apartment complex of more than 470 units there as well as a large retail development, where Wegmans will locate a 125,000-sf grocery store. The vitality of these new developments, combined with taking less desirable office space out of the office inventory, will increase the viability of the suburban office market.

White Plains CBD

Developer Lennar Multifamily Communities LLC is slated to deliver 700 rental units in two residential rental towers at 60 South Broadway on the site of the former Westchester Pavilion Mall.  Additionally, Esplanade Venture Partnership has received approvals to convert its 251,000-sf senior living building at what will be known as One Lyon Place into a market-rate apartment building with 212 residential units and 10,000 sf of medical space.

More apartment development is underway, including the conversion of 440 Hamilton Avenue into almost 250 units, while LCOR is building a 16-story, 288-unit residential complex at 55 Bank Street.

Yonkers

Yonkers is enjoying a resurgence of new capital directed towards development. National Resources started early with the conversion of an industrial complex into a loft-style office complex that is attracting tenants. Additionally, in Yonkers, more than 1,000 apartment units are currently under construction, including:

  • RXR’s joint venture with Hudson Meridian to build Larkin Park, set to feature more than 400 apartment units;
  • Mill Creek’s development of the 325-unit Modera | Hudson Riverfront;
  • The 25-story Hudson Park, from Strategic Capital, with more than 200 apartment units;
  • Several other residential projects, all with fewer than than 100 units, are under construction.
  • 57 Alexander Street, a six-acre waterfront property along the Hudson River, located within two blocks from the Yonkers Station via the Metro North Hudson line and Amtrak, is on the market and drawing considerable interest. The 268,412-sf site has four tax lots allowing for residential development.

New Rochelle

RXR was named ‘Master Developer’ of New Rochelle, and along with other developers, investors, and community leaders, is championing the rezoning and rebuilding of its downtown. With almost 15 projects underway totaling some 1,000 new apartment units, New Rochelle is hoping to attract more than $1 billion to fund additional new projects.

“We are bullish on the Westchester urban markets,” said Jim Fagan, Managing Principal. “Demand is strong, vacancies continue their decline, major employers are making commitments, and new residential is starting to follow. There is no question that access to transit is a key driver.”

In looking at the health of the office market, Westchester County ended 2017 with a 19.6 percent overall office vacancy rate, an improvement compared with the 21.2 percent recorded a year ago. Downtown White Plains showcased the most significant delta, ending 2017 at 16.7 percent, compared with 21.7 percent the year prior.

While the Westchester County leasing market declined to 1.34 million sf in 2017 compared with 1.5 million sf one year ago, it still exceeded the five-year average. The overall leasing market registered the following transactions as the largest throughout 2017:

  • Sumitomo Mitsui Banking Corp.’s 100,107-sf lease at 1 North Lexington Ave. in Downtown White Plains
  • NY Life Insurance leasing 89,426-sf at 44 South Broadway in White Plains
  • Ascensia Diabetes Care’s 65,000-sf lease at 100 Summit Lake Dr. in Valhalla
  • Turbonic leasing 33,738-sf at 1 North Lexington Ave. in White Plains
  • USI Insurance’s 32,000-sf lease, also at 100 Summit Lake Dr. in Valhalla
  • Milber,Makris, Plousadis & Seiden LLP’s 29,973-sf lease at 709 Westchester Ave.
    in White Plains

The average taking rents for Westchester County rose slightly year-over-year, with office owners feeling more bullish about their future. Meanwhile, Downtown White Plains enjoyed the county’s biggest increase in taking rents, which increase by 15 percent year-over-year.

“Downtown White Plains continues to be the strongest of all Westchester markets, with increasing demand for space among employers, workers, and residents,” Fagan said. “We also expect the other urban markets to build on the momentum established in 2017.”

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.