Westchester County’s residential real estate market has been booming throughout the pandemic, and now commercial real estate brokers are seeing signs that strong demand is also extending to commercial spaces. Strong demand for industrial properties, continued resilience of the multi-family sector, and signs of stabilization in retail vacancy rates are all contributing to the optimism about Westchester’s commercial market, according to the area realtor Houlihan Lawrence’s first quarter market report for Westchester County.
However, seeing the light at the end of the tunnel was not always clear. The imbalance of supply and demand for Westchester offices resulted in higher vacancy rates. While vacancy increased by three percent since the start of the pandemic, leasing activity is now starting to see longer term space positions due to the rise in vaccinations.
In regard to Westchester’s multifamily assets, the market has been remarkably stable. Asking rent per square foot has been steady, with the rent rate per unit increasing modestly. The mass of individuals leaving Manhattan for Westchester is also a contributing factor to Westchester’s continued resilience. However, with apartment rental prices in New York City down around 15% on average, some households may reconsider their decision.
“The sustained population movements out of densely populated urban areas into the suburbs and more rural areas is a pandemic-spurred silver lining to watch,” says Tom LaPerch, Director of Houlihan Lawrence Commercial.
In addition, the presence of an affluent consumer is a strong driver for new retailers and service companies interested in expanding premium brands here. While retail vacancy rate only increased by 0.1%, Target’s first location opening in Yonkers at the Cross County Shopping Center hopes to bring an economic boost within the community.
Industrial spaces in Westchester are in high demand. In Southern Westchester, the industrial properties tend to be older, and not always accessible to major highways.
Fluctuations in occupancy are to be expected as tenants compete to identify suitable options, landlords hold out for credited tenants, and/or upgrades are made accordingly. Considering these factors, Costar statistics show a modest increase in Industrial/Flex vacancy and a plateauing of lease rates at cyclical highs.
Overall, the recovering economy and rising property replacement values, combined with attractive interest rates should lead to a continued rebound within Westchester’s commercial market.