Newmark Knight Frank (NKF) today announced its findings for its 4Q17 office market analysis of Westchester and Fairfield Counties, which shows enhanced demand driven by large deals closed in both markets.
In Westchester, gross leasing activity in 2017 totaled 2.1 million square feet in 270 deals. Last year saw morelarge-size deals completed than in 2016 when there was a flurry of small-to-midsize transactions. For comparison, 2016 saw four deals greater than 50,000 square feet for a combined total of 373,000 square feet, while 2017 hadeight deals greater than 50,000 square feet totaling 630,000 square feet. As of year-end 2017, a 25,000-square-foot tenant would only have five properties to choose from in the Eastern market and just four in the Central Business District (CBD). In the White Plains CBD, net-effective rent averaged $26.71/SF in 2017, up 15.2% from last year.
Renewal activity increased by 25.3% last quarter, and despite slower-paced year-end leasing activity, 2017’stotal leasing activity finished above the yearly historical leasing average of 2 million square feet. The FIRE (finance, insurance and real estate) sector captured 25% of total leasing activity, and the healthcare sector was just behind it with a total 24% of this year’s demand, doubling last year’s figure. Educational and health services remained the region’s leading job generators with a 2.2% increase or 4,700 jobs. Additional highlights from Westchester County’s office market this quarter are outlined below:
- The overall availability rate ended at 23.0%, stable from last quarter, but 2.6 percentage points lower than the 25.6% peak recorded in the third quarter of 2016.
- The overall weighted average asking rent showed a 0.8% increase over the past quarter to $26.67/SFbut dropped by 2.3% from last year’s $27.29/SF due to lower-quoted asking rents in the north.
In Fairfield, large deals similarly enhanced demand,however additional blocks of space clouded an already burdened market. One of the top leases in Fairfield was Greenwich’s Interactive Brokers, who signed a 162,000-square renewal and expansion at Pickwick Plaza. In fact, Greenwich and Stamford saw the lion’s share of leasing, with volume doubling from 2016 in Greenwich and demand in Stamford growing by 47.8% in the past year to nearly 2 million square feet. Fairfield County also saw high leasing activity for renewals this year totaling 1.4 million square feet, finishing above the five-year average of 1.3 million square feet.
Despite increased supply, 2017’s demand was enhanced by Gateway and Harbor Point’s 500,000-square-foot, build-to-suit project at the Stamford transportation center, the first landlord-built project since 2010. This brought leasing activity to a gross of 4.2 million square feet, up 18.5% over the past year. Though they didn’t help ease existing supply, revitalization projects added a new dynamic, and have the potential to create thousands of jobs and hundreds of millions of dollars in planned capital expenditures.Other key stats from the Fairfield market include the weighted average asking rent dropping by 1.6%, from $37.73/SF in 2016 to $37.12/SF, because of high-priced blocks of space coming offline in Greenwich.
“It is an interesting time for supply and demand in Fairfield and Westchester Counties as we kick off the new year. Between the build-to-suit and revitalization projects, the momentum should continue into 2018 with an abundance of premier properties that will be primed to compete,” said Executive Managing Director James Ritman. “We expect to see this investment in the markets’ supply paying off in the year ahead, as both tenants and landlords take advantage of refreshed properties and plan for their future business goals.”
About Newmark Knight Frank
Newmark Knight Frank (NKF) is one of the world's leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NKF's 15,000 professionals operate from more than 400 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NKF's strong foundation makes it one of the most trusted names in commercial real estate. NKF's full-service platform comprises BGC's real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing, corporate advisory services, consulting, project and development management, property and corporate facilities management services, valuation and advisory services, and capital markets services provided through its NKF Capital Markets brand. For further information, visit www.ngkf.com.
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