Transport-oriented submarkets are expected to be the main drivers of growth for the county going forward in 2019
Stamford, CT – April 9, 2019 – According to Cushman & Wakefield’s Q1 2019 Westchester and Fairfield Office Market Reports, leasing continues to show positive growth in and around the transportation submarkets of White Plains and Stamford with properties located within a short walking distance from Metro-North stations remaining in high demand.
While demand in the first quarter reached some of its highest levels of leasing activity in nearly 10 years—outpacing the five-year historical average by 20.6%, this was largely driven by one transaction, the upcoming relocation of WWE’s corporate headquarters from Exit 9 East Main Street to 677 Washington Boulevard next to the Stamford Transportation Center. This large lease was the predominant driver of growth in the first quarter.
The largest office leasing transactions in Fairfield County for the first quarter of 2019 included:
- 415,266-sf new lease at 677 Washington Boulevard in Stamford, CT
- 18,391-sf new lease at 400 Atlantic Street in Stamford, CT
- 16,032-sf new lease at 263 Tresser Boulevard in Stamford, CT
On the contrary, when it comes to vacancies several large blocks of space in Stamford are keeping the overall vacancy rate elevated in the county, with the most notable being: Starwood Hotel’s sublease for 272,802-sf at 333 Ludlow Street and 275,000-sf of the former GE Energy site at 800 Long Ridge Road.
“Overall vacancy is anticipated to drop as large corporate tenants begin to transition into their new space over the course of the next 12 to 36 months,” said Jim Fagan, Managing Principal, Connecticut and Westchester Market Leader of Cushman & Wakefield. “Similarly, absorption should see an uptick as vacancy throughout the county begins to fall.”
Asking rents across the county dropped slightly over the last 12 months to $32. The Greenwich and Central submarkets registered the largest year-over-year declines in their rents in excess of $2.00 psf, respectively. Large sublease space additions in the downtown market of Greenwich contributed most substantially to the submarkets’ year-over-year decline, while space additions in Westport quoting rents below the market average contributed to the fall in the Central submarkets year-over-year decline.
Overall, leasing activity in Westchester County showed positive growth in the first quarter, increasing 2.8% from the previous year, however, relative to the five-year quarterly average, leasing activity fell short 17.8%, recording only 251,127 square feet (sf) in new transactions. The West I-287 submarket registered approximately 44.0% of county wide demand in the first quarter, followed by the East I-287 submarket which recorded 83,691 sf in new leasing transactions.
The largest leasing transactions in Westchester County for the first quarter of 2019 included:
- 63,575-sf new lease at 1311 Mamaroneck Avenue in White Plains, NY
- 25,000-sf new lease at 2500 Westchester Avenue in Purchase, NY
- 17,812-sf new lease at 50 Main Street in White Plains, NY
The vacancy rate in Westchester County shrunk 70 basis points (bps) relative to one year ago to 23.9%. The substantial reduction in the overall vacancy rate can be attributed to removing the IBM campus in Somers from the statistical inventory which totals approximately 1,100,000 sf. As a result, the Hudson Valley submarket’s overall vacancy rate shrunk 720 bps over the last twelve months to 89.0%.
Average asking rents increased $0.30 psf over from the previous year to $28.64. The Northern and White Plains commercial business district (CBD) submarkets are leading this trend registering the largest year-over-year increase in the average asking rent of space by $0.80 psf and $0.30 psf, respectively. Class A space in downtown White Plains recorded a $0.86 psf year-over-year hike to $37.38, making it the most expensive submarket in the county.
However, as space in the downtown White Plains submarket continues to be absorbed, leasing velocity in the White Plains CBD is anticipated to weaken. Furthermore, pricing in the White Plains CBD is expected to continue its upward trajectory, which may also diminish tenant demand.
“The East and West I-287 submarkets are expected to be the main drivers of growth in the following months as landlords begin to renovate and complete building capital improvements, which will make the tradeoff of a less accessible office building more attractive for tenants wanting to be in a more urban setting,” said Jim Fagan.
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