County registers increase in overall asking rental rates, drop in overall vacancy rates as major corporations eye White Plains CBD in 1st quarter of 2017

Westchester County experienced strong leasing activity in the first quarter of 2017, commencing what is forecasted to be a shiftin market fundamentals following four years of annual negative net absorption, according to JLL. Large deals by major corporations entering the White Plains central business district fueled much of the positive net absorption this quarter.

“With medical, life science, and research space continuing to command significantly higher rents than most suburban office properties, more buildings in Westchester County are likely to be repurposed for these industries,” said Chris O’Callaghan, Managing Director and Westchester County market lead for JLL.

Tenants completed 453,678 square feet in transactions this quarter, mostly on par with historic levels of leasing activity, and slightly higher deal volume than the 422,399 square feet witnessed during the previous quarter. The steady pace of leasing fueled 431,543 square feet in positive net absorption throughout Westchester County in the first quarter of 2017, compared with 195,864 square feet of negative net absorption the previous quarter.

Insurance and healthcare firms accounted for most of the leasing activity in the first quarter of the year. New York Life Insurance Co. signed for 44,713 square feet at 44 South Broadway in White Plains, USI Insurance Services LLC took 32,000 square feet at 100 Summit Lake Drive in Valhalla, Liberty Mutual Insurance inked a deal for 20,146 square feet at 4 Gannett Drive in White Plains and Greenwich Hospital completed a lease for 17,898 square feet at 90 South Ridge Street in Rye Brook.

Westchester County’s overall vacancy rate fell to 21.7percent in the first quarter of 2017, a decrease of 12.9 percent (or 320 basis points) from 24.9 percent the previous quarter.The county’s Class A vacancy rate dropped to 23.9 percent this quarter, a decrease of 6.3 percent (or 160 basis points) from 25.5 percent in the fourth quarter of 2016.

Overall average asking rental rates for direct space in Westchester County rose slightly to $26.91 per square foot in the first quarter of 2017, an increase of less than 1.0 percent from $26.88 per square foot the previous quarter. The county’s Class A rents dropped to $27.60 per square foot this quarter, a decrease of 1.0 percent from $27.89 per square foot in the fourth quarter of 2016.

White Plains CBD

The White Plains CBD accounted for nearly 25 percent of deals, or 101,239 square feet in transactions, in the first quarter of 2017. Several significant leases were signed by major corporations that viewed the submarket as an attractive location for large offices. In addition to the New York Life and Liberty Mutual transactions, Sidney Frank Importing Co. and Greenberg Traurig LLPalso inked leases for more than 20,000 square feet in the CBD. ?

The overall vacancy rate in the White Plains CBDfell to 22.5 percent in the first quarter of 2017, a decrease of 15.7 percent (or 420 basis points) from 26.7 percent the previous quarter. The submarket’s Class A vacancy rate dropped to 23.5 percent this quarter, a decrease of 20.1 percent (or 590 basis points) from 29.4 percent in the fourth quarter of 2016.

Overall average asking rents for direct space in the White Plains CBD fell to $28.84 per square foot in the first quarter of 2017, a decrease of 3.9 percent from $30.00 per square foot the previous quarter. The submarket’s Class A rents dropped to $30.18 per square foot this quarter, a decrease of 3.8 percent from $31.38 per square foot in the fourth quarter of 2016.

I-287 Corridor

The I-287 Corridor claimed more than half of all leasing activity in Westchester County in the first quarter of the year. More than 256,391 square feet in transactions were completed in the county, and the I-287 West Corridor accounted for most of that volume, recording 174,241 square feet in deals this quarter. With suburban office vacancy remaining elevated, office buildings along the I-287 Corridor are being converted to higher-rent medical, residential, life sciences, fitness, retail and educational space. Repurposed buildings include 103, 105, 106, 108 and 110 Corporate Park Drive, which were repurposed for residential and retail.

Overall vacancy rates in the I-287 West Corridordropped to 22.0 percent in the first quarter of 2017, a decrease of 3.9 percent (or 90 basis points) from 22.9 percent the previous quarter.The submarket’s Class A vacancy rose slightly to 24.0 percent this quarter, an increase of less than 1.0 percent (or 10 basis points) from 23.9 percent in the fourth quarter of 2016.

Overall average asking rents for direct space in the I-287 West Corridor rose slightly to $24.61 per square foot in the first quarter of 2017, an increase of less than 1.0 percent from $24.56 per square foot the previous quarter. The submarket’s Class A rates for direct space remained unchanged at $25.29 per square foot from the fourth quarter of 2016.

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JLL is a leader in the New York tri-state commercial real estate market, with more than 2,300 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2015, the New York tri-state team completed approximately 32.6 million square feet of lease transactions; arranged investment sales, notes, debt and equity transactions valued at more than $8.2 billion; managed projects valued at $7.8 billion; and oversaw a property management, facilities management and agency leasing portfolio exceeding 141 million square feet.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.