While overall performance was modest, Westchester saw its highest volume of leasing activity for office space since Q2 2017, just shy of 213,000 square feet. Leasing velocity, or the measure of new leases and renewals, was almost 304,000 square feet, or about 28 percent below the five-year quarterly average.
Rents remained mostly stable with no increase or decrease greater than 2 percent anywhere but southern Westchester, which rose to $26.76 per square foot on average. Rent in the Central Business District rose to $35.51, a 17 percent increase over the last four years.
The big item of note was the rate of availability for commercial spaces in Westchester County: 17.8 percent, a drop of 4 percent or more than 400 base points (bps) since Q2. (For reference, availability rates in neighboring Fairfield County dropped only 20 bps.) Why such a large dip? And why are analysts not particularly concerned?
“Removing the IBM campus from the market had a huge impact on the county’s availability rate and its absorption,” says CBRE Executive Vice President William V. Cuddy, Jr. The campus off Route 100 is the same one that has been acquired for the proposed Somers Academy project, all 1.1 million square feet of it.
“If the proposed conversion of the complex into a for-profit school for science, technology, engineering and math education comes to fruition,” he says, “it would be the county’s largest and most prominent example of adaptive repurposing, a trend that continues to drive this market.”