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2016 Commercial Real Estate Outlook
Cautious optimism describes the 2016 mindset of those fore- casting the commercial real estate market in Westchester, but the outlook varies greatly depending on which mar- ket segment is on the radar screen. Demand for rentals in the high-profile office segment looks moribund, while the retail market shows strong demand. Medical isn’t cooling; it’s just changing direction, while mixed-use de- velopments tap into changing lifestyles. The divisions somewhat reflect the economy as a whole: full cor- porate purses with strings tightly cinched as consumer spending continues to fuel the economy.
cial property owner, Mack-Cali. “[This year] will be interesting,” he says. “It remains to be seen whether there will be any real eco- nomic growth, but I think it will be much the same as it has been.” Rakow, however, is predicting stronger growth for 2016: “We’ve gotten off to a positive start,” he says, “and we are busy working on new lease negotiations all around the county.”
Several trends put marks on the positive side of the equation for 2016, according to Westchester County Office of Economic Development Director William Mooney III. “From an economic-development standpoint, the real estate market has been positive in a wide range of areas,” he says. “These include housing, conversion of existing corporate space, healthcare expansion, and biotech expansion. Many of these projects have been approved and will be in construction in 2016.”
Commercial real estate isn’t a homogenous market, so here’s a segment-by-segment look at the year ahead.
“Given market realities, 2015 was about as good as we should have expected,” says Rakow Commercial Realty Group CEO Rick Rakow. And 2016 may follow a similar course, notes Jeff Warner, senior vice president of leasing for Westchester’s largest commer-
Office
HOT METER: 4
“The 2015 market wasn’t great,” says Glenn Walsh, executive managing director of Newmark Grubb Knight Frank, a major broker in White Plains. “But most of the bad news is coming from north of I-287, where the vacancy rate is around 30 per- cent. The southern part of the county isn’t such a bad market.” Walsh points out that Northern Westchester has lost some big tenants in recent years, like MBIA in Armonk, and that those
properties are just now being re-purposed.
According to data supplied by Houlihan Lawrence
Commercial Real Estate Group, about 18 percent of the 23 million square feet of total Class-A office space (nicer build- ings with amenities) in the Westchester market was vacant at the beginning of the year. Rental rates range from $28 to $37 per square foot in better buildings, although they dip to less
t
Office rentals in Westchester are lagging, but building sales are up. Several major properties are now on the market and will draw interest in 2016, including 44 South Broadway in White Plains, which offers 825,000 square feet of Class-A office space.
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