government has made it a goal to attract more business in 2015 by combatting ... financial and business services sectors
MARKETBEAT OFFICE SNAPSHOT
WESTCHESTER COUNTY, NY
Q4 2014
A Cushman & Wakefield Research Publication
Cushman & Wakefield, Inc. 107 Elm Street, 8th Floor Stamford, CT 06902-3851 www.cushmanwakefield.com/knowledge
For more information, contact: Jason Price, Research Director 201 508 5208
[email protected]
Y-O-Y CHANGE
17.8%
19.9%
2.1 pp
$29.02
$29.90
3.0%
1,648,172
1,069,508
-35.1%
Overall Vacancy Direct Asking Rents (psf/yr) YTD Leasing Activity (sf)
12 MONTH FORECAST
DIRECT RENTAL VS. VACANCY RATES $31.00 $30.50 $30.00 $29.50 $29.00 $28.50 $28.00 $27.50 $27.00
19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 2010
IMPROVED Q4 DEMAND HALTS 5-YEAR ANNUAL LOW
2011
2012
2013
DIRECT GROSS RENTAL RATE
2014
DIRECT VACANCY RATE
2010
2011
LEASING ACTIVITY
2012
1.1 -0.4
0.2
1.6 -0.6
2.0 1.5 1.0 0.5 0.0 -0.5 -1.0
1.3
LEASING ACTIVITY VS. OVERALL ABSORPTION
msf
Tenant demand edged higher during Q4, with more than 290,000 sf of new leases signed. With a 25.6% spike in leasing compared to Q3, the county avoided recording its lowest annual leasing total since 2009 with close to 1.1 million square feet (msf) leased in 2014. The largest deal of Q4 involved Clarfeld Financial Advisors leasing 30,000 sf in Tarrytown. The Central submarket posted the strongest quarter of (97,987 sf) during Q4, accounting for 33.4% of the countywide total. With M&T Bank taking 19,700 sf in Tarrytown and the aforementioned Clarfeld Financial Advisors deal, the Central submarket boasted a 19.3% improvement in leasing since Q3. The Eastern submarket saw demand almost triple from quarter-quarter with Acadia Realty Trust (29,322 sf) contributing a portion to the 80,531 sf leased in Q4. Deal volume for the quarter was driven by the financial and business services sectors.
Q4 2014
-0.2
Asking Rents inched higher during Q4 to an average of $30.30 per square foot (psf) for class A direct space. The rise in rents over the past year can be attributed to the excess of space becoming available in the high priced White Plains CBD submarket consistently throughout 2014.
Q4 2013
1.2
Q4 marks the fourth consecutive quarter in which the vacancy rate rose. Though vacancy in Westchester County sits at 19.9% and represents a 2.1% increase from last year, there was only a 0.1 pp change since last quarter. The Southern submarket saw dispositions outpace new leasing with 37,288 square feet (sf) of overall negative absorption, while most of the submarkets in the county recorded positive absorption during Q4. The largest block of space to come online in Q4 was 40,000 sf at 222 Bloomingdale Road, which led to a 1.4 pp increase in vacancy within the White Plains CBD submarket.
STATS ON THE GO
1.2
RISE IN VACANCY SLOWED DURING Q4
Although Westchester County, continues to be a more affordable alternative for back-office users with its proximity to New York City, some barriers do exist which local government is looking to improve upon to attract more business. In the meantime, the repurposing of office space and the surge of medical tenants over the past two years has slowed the rise in vacancy. Any significant improvement in occupancy levels will be mainly due to office-using employment experiencing substantial growth within Westchester County.
-0.7
The unemployment rate for Westchester County stands at 4.8%, a 1.2 percentage point (pp) improvement from the start of the year and a step closer to pre-recession levels. Despite this, office-using employment has seen only slight gains throughout the year. In 2014, the trend of adapting office space for other uses such as medical has continued and has led to a surge of mixed-use developments within the county. Local government has made it a goal to attract more business in 2015 by combatting the complexity of doing business within the county.
OUTLOOK
psf/yr
ECONOMIC OVERVIEW
2013
2014
OVERALL ABSORPTION
The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2015 Cushman & Wakefield, Inc. All rights reserved.
1
WESTCHESTER COUNTY, NY SUBMARKET
INVENTORY
OVERALL VACANCY RATE
YTD LEASING ACTIVITY
UNDER CONSTRUCTION
YTD CONSTRUCTION COMPLETIONS
YTD DIRECT NET ABSORPTION
YTD OVERALL NET ABSORPTION
22.3%
DIRECT VACANCY RATE 18.8%
WHITE PLAINS CENTRAL BUSINESS DISTRICT White Plains Suburbs
6,207,675
225,758
0
0
(84,274)
4,478,881
25.9%
25.4%
147,088
0
0
Northern
3,487,464
30.6%
30.5%
73,165
0
Central
6,178,139
13.5%
12.9%
245,415
Eastern
6,412,579
18.0%
16.1%
Southern
2,402,433
8.4%
22,959,496 29,167,171
SUBURBAN TOTALS
DIRECT WTD. AVG. CLASS A GROSS RENTAL RATE*
(83,630)
OVERALL WTD. AVG ALL CLASSES GROSS RENTAL RATE* $32.60
(64,508)
(75,897)
$28.49
$28.54
0
(270,875)
(270,875)
$30.24
$30.48
300,000
0
15,367
(3,515)
$27.50
$27.85
342,554
85,000
0
96,096
66,816
$30.82
$30.79
8.4%
35,528
0
0
(59,881)
(59,881)
$26.20
$27.34
19.2%
18.4%
843,750
385,000
0
(286,801)
(343,352)
$29.18
$29.43
19.9%
18.5%
1,069,508
385,000
0
(371,075)
(426,982)
$29.92
$30.30
$33.77
* RENTAL RATES REFLECT ASKING $PSF/YEAR
MARKET HIGHLIGHTS SIGNIFICANT Q4 2014 LEASE TRANSACTIONS
SUBMARKET
TENANT
BUILDING CLASS
520 White Plains Road, Tarrytown
Central
Clarfeld Financial Advisors
A
30,000
411 Theodore Fremd Avenue, Rye
Eastern
Acadia Realty Trust
A
29,322
120 White Plains Road, Tarrytown
Central
M&T Bank
A
19,700
1 Ridge Hill Road, Yonkers
Southern
Regus
A
15,000
75 South Broadway, White Plains
White Plains-CBD
Workman’s Compensation Board
A
13,000
SIGNIFICANT Q4 2014 SALE TRANSACTIONS
SUBMARKET
BUYER
PURCHASE PRICE / $PSF
555 Theodore Fremd Avenue
Eastern
The ARC Companies
$39,500,000 / $219.44
SIGNIFICANT Q4 2014 CONSTRUCTION COMPLETIONS N/A
SUBMARKET
MAJOR TENANT
COMPLETION DATE
BUILDING SQUARE FEET (% LEASED)
SIGNIFICANT PROJECTS UNDER CONSTRUCTION 777 Old Saw Mill River Road, Tarrytown
SUBMARKET
MAJOR TENANT
COMPLETION DATE
BUILDING SQUARE FEET
Central
Regeneron
Q4 2015
SQUARE FEET
SQUARE FEET 180,000
300,000
* RENEWAL – NOT INCLUDED IN LEASING ACTIVITY STATISTICS
Cushman & Wakefield, Inc. 107 Elm Street, 8th Floor Stamford, CT 06902-3851 www.cushmanwakefield.com/knowledge
For more information, contact: Jason Price, Research Director 201 508 5208
[email protected]
The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2015 Cushman & Wakefield, Inc. All rights reserved.
2