Research

WESTCHESTER COUNTY
4Q17 OFFICE MARKET

office market hits Current Conditions

stride in 2017, despite
quiet fourth quarter
A recap of Westchester County’s office market shows that 2017 was the
year when large deals re-emerged; absorption moved to positive
territory; availability continued its gradual descent; new entrants
capitalized on solid investment sale opportunities; and adaptive reuse of
older stock altered the inventory. In a nutshell, Westchester took a stride
towards a healthier and more confident market. Despite a sluggish fourth
quarter, demand from prior quarters led to 300,707 square feet of annual
net absorption, marking the first full year of occupancy gains since 2013.
• 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.
• With 2.1 million square feet transacted, leasing activity stood
above the yearly historical average of 2.0 million square feet.
• The overall weighted average asking rent showed a 0.8%
increase over the past quarter to $26.67/SF, but dropped by
2.3% from last year’s $27.29/SF due to lower-quoted asking
rents in the north.
Market Analysis
Asking Rent and Availability

$31
The overall availability rate ended at 23.0%, stable from last quarter but 26%
$30
2.6 percentage points lower than the 25.6% peak recorded in the third 24%
quarter of 2016. While large uncompetitive blocks of space in the north $29
22%
continued to artificially inflate the county’s supply, removing only three of $28 20%
these blocks would slash the availability rate to 15.7%, a difference of 7.3
$27 18%
points. Conditions in the lower Westchester County markets depicted a
$26 16%
brighter picture in 2017, not only with an improving office sector but also
4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
from an economic development standpoint, with a wave of projects that
include mixed-use retail, medical, biotech and multi-housing construction Average Asking Rent (Price/SF) Availability (%)

as well as an extensive plan that calls for a complete overhaul of White

Plains’ transportation center. This year’s inventory base started with
Net Absorption
more than 500,000 square feet removed from statistics because of five
Square Feet, Millions
redevelopment projects, including a 125,000-square-foot Wegman’s
supermarket and a 421-unit multi-housing building to be built at the site 325
of five obsolete office buildings in Harrison, and the conversion of 440 100
Hamilton Avenue and 1 Water Street in White Plains.
-125

-350
Leasing Activity Surpasses Historical Yearly Average
-575
Gross leasing activity in 2017 totaled 2.1 million square feet in 270 deals.
Although the number of deals in 2016 was much higher at 331, this -800
4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17
year’s total leasing volume was roughly on par with last year’s. This was
because more large-size deals were completed this year than in 2016,
when there was a flurry of small to midsize deals. To quantify, in 2016,
Market Summary
there were four deals greater than 50,000 square feet that totaled a
combined 373,000 square feet. In 2017, there were eight deals greater Current Prior Year Ago 12 Month
than 50,000 square feet that totaled 630,000 square feet. Renewal Quarter Quarter Period Forecast
activity increased by 25.3%, from 812,000 square feet last year to 1.0 Total Inventory 27.7MSF 27.7MSF 27.3MSF 
million square feet in 2017. By contrast, new lease transactions were
Availability Rate 23.0% 23.0% 24.4% 
down 15.4%, from approximately 1.3 million square feet in 2016 to 1.1
million square feet this year. Leasing activity in the fourth quarter Quarterly Net Absorption 10,058 113,837 329,601 
registered only 423,248 square feet, down 35.7% from the third quarter Average Asking Rent $26.67 $26.47 $27.29 
and 26.4% over the past year. Despite the slow pace at year-end, this Under Construction 0 0 0 
year’s total leasing activity finished above the yearly historical leasing
Deliveries 0 0 0 
average of 2.0 million square feet.
Research
WESTCHESTER COUNTY
4Q17 OFFICE MARKET

FIRE Sector Led 2017 Demand but Lagged Behind 2016’s Tally
The FIRE (finance, insurance and real estate) sector captured 25.0% of
the total leasing in 2017. Sumitomo Mitsui’s 100,000-square-foot
relocation to the White Plains Central Business District (CBD) enhanced
financial-driven activity. Although the FIRE sector captured the majority
of this year’s leasing, it fell behind 2016’s tally of 32.0%. This was due
mainly to a decrease in demand from insurance firms. The insurance
sector captured 9.0% of this year’s activity, compared with 13.0% in
2016. Although New York Life Insurance completed its 180,000-square-
foot lease in the CBD, having signed a portion at the end of 2016, it was
not enough to reach last year’s total.
Healthcare Showed No Signs of Slowing Down
The healthcare sector captured 24.0% of this year’s demand, doubling
last year’s figure. In the largest deal of 2017, Montefiore Medical Center
recommitted to nearly 300,000 square feet at the South Westchester
Executive Park in Yonkers. Medical practices such as Montefiore Medical
Center have experienced tremendous growth over the past decades,
which has continued to influence the need for back-office operations that
support a vast network of medical facilities throughout the county.
Another medical-related occupier that made news this year was ENT &
Allergy Associates, which relocated two of its locations into new and
expanded footprints. In Tarrytown, the practice took 38,128 square feet
at 660 White Plains Road, while in the CBD, another 15,000-square-foot
lease was signed at 222 Bloomingdale Road. In Armonk, Burke
Rehabilitation Hospital also opened a new, 24,000-square-foot, facility at
99 Business Park Drive. In total, 510,000 square feet was leased by
healthcare-related tenants.
2017’s Outperformers
The White Plains CBD and the Eastern markets gained a footing in 2017.
The CBD outperformed with 221,303 square feet of positive annual
absorption, causing a 4.3-basis-point drop in availability, from 21.5% in
the prior year to 17.2%, and a 5.0% rise in asking rents. The Eastern
market absorbed 104,430 square feet, which trimmed 1.1 points from
18.5% to 17.4% and showed rental rate growth of 0.4%. Paradoxically,
leasing for both markets slowed in 2017. The CBD registered 600,000
square feet of leases, down 10.0% from 2016, while leasing in the
Eastern market totaled 535,000 square feet, down 31.6% over last year.
Atlas Air’s 120,000-square-foot renewal at 2000 Westchester Avenue
comprised nearly a quarter of this total. However, much of this year’s
decline resulted from a shortage of viable, true Class A, large block
options. The Western market improved, posting a 7.3% increase in
demand, which led to positive 25,338 square feet of absorption. Prestige
Brands’ 68,886-square-foot renewal and expansion was the largest deal
signed in this market.
Landlords Became More Aggressive as Viable Options Shrank
As of year-end 2017, a 25,000-square-foot tenant would have only five
properties to choose from in the Eastern market and only four in the
CBD. For a 50,000-square-foot requirement, only three properties would
meet the criteria, whereas the CBD would be left with one option, or
perhaps two if assembled on different floors. As a result, some landlords
were more aggressive and held back on overly generous concession
packages. In today’s market, it is not as easy for a tenant to secure one
month of free rent for every year of term, which until recent years had
been the norm. In fact, the net effective rent in the CBD averaged
$26.71/SF in 2017, up 15.2% from last year.

Top 2017 Lease Transactions

Tenant Building Submarket Type Square Feet

Montefiore Medical Center South Westchester Executive Park Southern Renewal 295,922
Atlas Air 2000 Westchester Avenue Eastern Renewal 120,000
Sumitomo Mitsui Banking Corp. 1 North Lexington Avenue White Plains CBD New Lease 101,411
The Dannon Company 1 Maple Avenue* White Plains CBD New Lease 80,248
Prestige Brands 660 White Plains Road Western Renewal, Expansion 68,886
Ascensia Diabetes Care 100 Summit Lake Drive Northern New Lease 65,000
ENT & Allergy Associates 660 White Plains Road Western New Lease 38,128

*Part retail building, not included in the office statistical inventory

Select 2017 Sales Transactions

Building Submarket Sale Price Price/SF Square Feet

44 South Broadway White Plains CBD $138,000,000 $162 851,773
660 White Plains Road Western $30,125,000 $108 279,000
520 White Plains Road Western $21,000,000 $117 180,000

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Research
WESTCHESTER COUNTY
4Q17 OFFICE MARKET
www.ngkf.com

Submarket Statistics Overall

Total Under Total Qtr YTD Direct Sublet

Inventory Construction Availability Absorption Absorption Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF)

Eastern Westchester 9,630,784 - 17.4% (26,134) 104,430 $27.07 $26.67

Northern Westchester 7,263,498 - 36.8% 45,735 (79,355) $24.71 -

Southern Westchester 1,823,632 - 17.2% (19,888) 28,991 $25.52 $20.41

Western Westchester 3,857,521 - 21.3% 57,837 25,338 $25.00 $19.49

White Plains CBD 5,094,687 - 17.2% (47,492) 221,303 $34.29 $23.29

Westchester County 27,670,122 - 23.0% 10,058 300,707 $26.67 $23.18

Submarket Statistics – Class A

Total Under Total Qtr YTD Direct Sublet

Inventory Construction Availability Absorption Absorption Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF)

Eastern Westchester 8,437,375 - 17.6% (25,974) 100,662 $27.41 $26.67

Northern Westchester 5,642,389 - 39.0% 32,285 57,257 $24.81 -

Southern Westchester 1,148,403 - 20.6% (11,301) 6,670 $27.15 $20.00

Western Westchester 2,732,141 - 23.4% 56,127 23,026 $25.19 $19.49

White Plains CBD 4,556,103 - 18.2% (49,080) 225,485 $34.87 $23.29

Westchester County 22,516,411 - 24.0% 2,057 413,100 $27.15 $23.21

Submarket Statistics – Class B

Total Under Total Qtr YTD Direct Sublet

Inventory Construction Availability Absorption Absorption Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF)

Eastern Westchester 1,193,409 - 15.9% (160) 3,768 $23.95 -

Northern Westchester 1,621,109 - 29.0% 13,450 (136,612) $24.23 -

Southern Westchester 675,229 - 11.5% (8,587) 22,321 $20.05 $22.00

Western Westchester 1,125,380 - 16.1% 1,710 2,312 $24.45 -

White Plains CBD 538,584 - 8.8% 1,588 (4,182) $24.84 -

Westchester County 5,153,711 - 18.7% 8,001 (112,393) $23.94 $22.00

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WESTCHESTER COUNTY
4Q17 OFFICE MARKET

Economic Conditions Employment By Industry

For the 12-month period ending in October 2017, private-sector Westchester-Orange-Rockland, 2017
employment in the region increased by 8,300, or 1.0%, to 804,700.
5.4% Construction
Jobs were added in educational and health services (+4,700), trade, 4.0%
15.5% Manufacturing
transportation and utilities (+1,600), professional and business
services (+1,500), financial activities (+1,400) and other services Trade, Transp., & Utilities
4.5% Information
(+1,300). Job losses were centered in manufacturing (negative 900), 20.1%
information (negative 600) and construction (negative 500). Financial Activities
8.8%
Prof. & Business Services
The region’s private sector employment grew by 1.0% year-over- Education
1.7%
year, compared with a gain of 1.2% over the same period last year. 5.2% Healthcare
17.1%
Educational and health services remained the region’s leading job Leisure and Hospitality
generators with a 2.2% increase, or 4,700 jobs. Job growth in this 13.0%
4.5% Other
sector is attributed mainly to strength in the healthcare sector. In the Government
Orange-Rockland-Westchester area, healthcare and social
assistance added 3,400 jobs over the period.
Source: U.S. Bureau of Labor Statistics

Unemployment Rate Payroll Employment

Seasonally Adjusted Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change

10% 4%

8% 2%

6% 0%

4% -2%

2% -4%

0% -6%
Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17

United States Westchester County United States NY-White Plains,Wayne NJ Metro Area

Source: New York State Department of Labor Source: U.S. Bureau of Labor Statistics

Consumer Price Index (CPI) Employment Growth by Industry

All Items, 12-Month % Change, Not Seasonally Adjusted Westchester-Orange-Rockland, NY, 12-Month % Change, Seasonally Adjusted

4% Construction
Manufacturing
3% Trade, Transp. & Utilities
Information
2%
Financial Services
1% Prof. & Business Services
Real Estate
0% Education
Healthcare
-1%
Leisure and Hospitality
Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17
Government

United States NY-NJ-CT-PA -3.0% -1.0% 1.0% 3.0% 5.0% 7.0%

Source: U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics

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Research

Westchester County Markets

Westchester County, NY
800 Westchester Avenue
Rye Brook, NY 10573
914.881.1024

Fairfield County, CT
680 Washington Boulevard
Stamford, CT 06901
203.531.3600

Karolina Alexandre
Research Manager
203.531.3609
KAlexandre@ngkf.com

Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been
revised. With this expansion and refinement in our data, there may be adjustments in historical statistics
including availability, asking rents, absorption and effective rents.

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