According to the latest quarterly report by JLL, the vacancy rate for office space has hit 62 percent in Northern Westchester, more than three times higher than submarkets in southern Westchester, which have a combined vacancy rate of approximately 20 percent.
JLL's research from the third quarter of 2017 also founds rents are down in general and that countywide, the vacancy rate is nearing 25 percent -- nearly five percent higher than 2013.
It remains to be seen whether the IBM and Pepsi campuses in Somers will have futures as multi-tenant offices, the JLL report said.
Average asking rents for office properties fell across the board in the third quarter with the exception of the I-287 West Corridor which displayed slight rent growth. 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.
In White Plains, a city that has seen a flurry of large leases in its central business district in 2017. Only two buildings in White Plains offer blocks of space greater than 50,000 square feet- 440 Hamilton and 1-11 Martine Avenue. Large firms considering White Plains will therefore be limited in their options going forward, the report concluded.
Office space in Central Westchester's I-287 corridor is on the medical mend.
The I-287 East Corridor continues to shift from housing more traditional corporate occupiers to a market driven by the healthcare sector, as medical tenants including Scarsdale Medical Group, Memorial Sloan-Kettering and WestMed absorb space. "Westchester continues to be a hotbed for the life science and pharmaceutical industries," the report said.
The transition in the I-287 East Corridor is part of the greater trend of challenged and obsolete Westchester office stock being repurposed for more appropriate and value-add uses such as residential, retail, fitness and even self-storage.
Young people lured to upscale space in southern Westchester, transforming their cities.
Towns in southern Westchester such as Mount Vernon, New Rochelle and Yonkers have also been targets of developers who see the chance to lure young people from New York with lower prices and hip, new developments. If these developments gain significant traction, it could prove to be a boon for the surrounding office real estate, JLL's report said.
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