The outlook for commercial real estate in Westchester depends greatly on your point of view. Buyers are happy because office-property prices are generally low. Tenants are complaining about higher rents because space in the most desirable locations is decreasingly available. Brokers, as is the nature of their business, are caught in the middle.
New lease originations in the county were down in 2018, according to Cushman & Wakefield analyst Steve Fiore. “Overall leasing was down around 28 percent,” he says. “A lot of that was due to the tight market.”
Photo courtesy of Cushman & Wakefield
“A lot of buildings have changed hands recently, and what the new owners do with them will affect what we see in terms of leasing activity.”
—Craig S. Ruoff, Senior Director Brokerage, Cushman & Wakefield
Craig S. Ruoff, senior director brokerage in the firm’s White Plains office, explains, “There isn’t as much available space in the most attractive buildings in the downtowns or the I-287 corridor.” That may change in the near term, however: “A lot of buildings have changed hands recently, and what the new owners do with them will affect what we see in terms of leasing activity. Many of those that changed hands were completely upgraded with additions to the amenity packages.”
“The submarkets where we’re seeing the most growth are the transit-oriented locations,” Fiore says. “The east I-287 market specifically has seen an 18 percent increase in leasing. This includes Rye, Rye Brook, Mamaroneck, and Port Chester. New Rochelle, with all the new construction that’s scheduled there, should see some strong leasing activity going forward.”
Rakow Realty chairman Rick Rakow points to other supply-and-demand factors affecting the market outlook. “I know a lot of the flex-warehouse properties on the west side of the county are looking for buyers,” he says. “The price for office properties has come down dramatically, while the price for warehouse property has gone up dramatically. The warehouse properties keep getting repurposed.”
Photo by Stefan Radtke
“The price for office properties has come down dramatically, while the price for warehouse property has gone up dramatically.”
—Rick Rakow, Chairman, Rakow Realty
So far, Rakow — who recently handed over the CEO title to longtime employee David Richman — hasn’t seen much impact on the commercial leasing market from the cut in corporate tax rates. “I haven’t heard anybody say, ‘Thanks to the tax cut, I’m going to hire 25 more people,’” he says. “If anything, people are still trying to reduce head count. It’s because they can. It’s so easy to have people work off-site today.”
Rakow underlines another important positive trend for Westchester County, though, when he adds: “Thousands and thousands of apartments are being built in Yonkers, New Rochelle, and White Plains. Anything that’s within walking distance of the transportation centers will do very well.”
“As the Millennials start to have children, you see them moving out of the city to the suburbs,” Ruoff says. That movement, he adds, portends well for office leasing. “With that comes companies who are following their workforce.”
