Guest Blog by Chris O’Callaghan, Managing Director, JLL

Guest Blog by Chris O’Callaghan, Managing Director, JLL

The Westchester County office market, which has undergone significant changes in the past several years, continues to evolve with vacant office parks being repositioned for a multitude of new and innovative uses. One of rising stars in today’s commercial market is industrial warehouse and flex space. Driven by dramatic changes in a retail market dominated by online shopping, warehouse space is in high demand in Westchester. Nowhere was this more evident than in the recent acquisition of Mack Cali’s 384,000-square-foot Elmsford distribution center for $70.25 million. While Class A office space is selling in the $75-$150 per square foot range depending on vacancy, industrial warehouse space just sold for $180 per square foot with capitalization rates well below that of office product. The demand for this space is logistics driven by online retailers such as Amazon who need to quickly get their products to their buyers. Warehouses offer many benefits to property owners. The cost of investing in warehouse space is significantly less than what you find with office space which continually needs to be upgraded and is subject to more wear and tear than warehouses. And with the occupancy rate for warehouse space in Westchester between 90-95%, it’s truly a landlord’s market. The other big story in the Westchester market is the continued transformation of obsolete office buildings into medical outpatient facilities, multi-family residences and retail stores. In Harrison, Simone Development Companies recently acquired a vacant office building on Corporate Park Drive which is being converted into a state-of-the-art pediatric ambulatory care center for Montefiore Medical Center. What was once dubbed Westchester’s “Platinum Mile,” the I-287 corridor has become the “Medical Mile”. Retailers are also eyeing these vacant office parks. For example, in Harrison you have Wegman’s opening its first Westchester supermarket in a former office park. In Chappaqua the former Reader’s Digest campus has been repurposed into a multi-use complex called Chappaqua Crossing featuring a Whole Foods supermarket, retail shops, a Lifetime Fitness facility and affordable rental apartments. In addition to bringing new vitality to Westchester’s economy, the repurposing of vacant office buildings has helped to reduce the inventory of office space in the county. Plans announced recently to convert the former IBM campus in Somers into a STEM education high school would further reduce the county’s office inventory and vacancy rate. The overall outlook for Westchester’s office market remains positive. The market will continue to be revived by building redevelopments and medical tenants. High quality office space in the county will be positively affected as other properties are redeveloped into medical, residential and recreational uses.

By | 2019-01-24T16:44:52-05:00 January 24th, 2019|Blog|0 Comments

About the Author:

Leave A Comment