Westchester’s commercial real estate landscape has evolved considerably over the years — and those sea changes are still coming on strong. The latest market report from Jones Lang La Salle Inc. (JLL) shows how shifts in the existing stock of commercial space are affecting traditional market behavior.
The major takeaways from the Q3 report include:
The report finds that the price for office properties fell across the board, save for I-287’s West Corridor, which showed a slight increase in growth. What’s behind this? “This regression in asking rents shows how landlords, particularly those in suburban markets, have been forced to adjust their price points to meet tenants’ expectations,” the report notes.
The popularity of White Plains’ Central Business District means that available office space there is now in slim supply. Only two buildings offer blocks of space greater than 50,000 square feet: 440 Hamilton and 1-11 Martine Avenue. As a result, large firms considering White Plains may have a tough time finding available space going forward.
In addition, the report suggests that future leasing activity along I-287’s East Corridor will continue to be largely driven by healthcare organizations. Businesses like Scarsdale Medical Group, Memorial Sloan-Kettering, and WestMed are absorbing space along I-287, which previously was home mostly to traditional corporate occupiers.
And, due to large office campuses formerly occupied by Pepsi and IBM, Northern Westchester is struggling with a 62-percent Class A vacancy rate — more than three times higher than submarkets in southern Westchester, which have a combined vacancy rate of approximately 20 percent, according to JLL. By contrast, Southern Westchester is heating up, with area developers bringing mixed-use and transit-oriented developments to towns like Mount Vernon, New Rochelle, and Yonkers in hopes of drawing in a younger audience from the City. Once these residential projects gain traction, the report notes, it could “prove to be a boon for the surrounding office real estate.”