The time has arrived for Westchester County - Mid-Year Review and Forecast - New York

Over the last four years, we have seen that economic growth in Fairfield County generally precedes similar economic growth in Westchester County by about 18 to 24 months. Commercial real estate in Fairfield County has been enjoying an enviable boom market for some time, and neighboring Westchester County's time has now arrived.

While the published, overall vacancy rate for commercial space in Westchester County is higher than in Fairfield County, the statistics are misleading, because Westchester County's inventory of available office space consists primarily of large blocks of space that can't easily be subdivided, while most of the growing demand is among small and mid-size space users seeking units between 2,000 and 10,000 square feet. Small to mid-size users account for more than 70 percent of all direct leasing transactions in Westchester County.

Many of Westchester's buildings were built for single users. The fact that these structures do not subdivide well for the typical users in the market underscores the more positive reality behind Westchester County's distortedly high vacancy rate: the existing mismatch between per transaction demand size and the size and nature of Westchester's existing commercial inventory offers vast opportunities for gain for certain landlords as well as tenants, namely those who have the ability to identify and lease multi-tenantable product within well-located, Class A buildings.

The property at 500 Mamaroneck Avenue in Harrison, NY. is an example of a well located, top quality Westchester County building whose new ownership is marketing one of the asset's greatest inherent virtues: its supply of efficiently subdividable spaces to meet the typical, growing user demand. One of the main reasons that a group headed by Peter and Anthony Malkin recently acquired the property is precisely that smaller tenants have few true Class-A options. 500 Mamaroneck has two separate center cores on five different floors; each separate core measures approximately 30,000 square feet, and each core can be subdivided to units measuring as little as 1,800 square feet.

The 500 Mamaroneck opportunity is even greater, given that rents in Westchester are significantly lower than in Fairfield County. Whereas a tenant must pay an average of $36 to $38 per square foot for prime space in Stamford, $50 to $65 psf in Greenwich, and in the low $30's psf in Norwalk, comparable top-grade space in Westchester can be had for between $25 and $28 per a square foot. And tenant work allowances and free rent are better in Westchester, too.

What's more, Westchester has a great transportation infrastructure, encompassing three railway lines, major roadways, and bus lines which connect the county to all parts of the metro area.

Within just a few weeks after the Malkins acquired 500 Mamaroneck, Malkin affiliate W&M Properties received no fewer than 14 proposals from interested users, and W&M is now actively negotiating deals for more than 380,000 square feet. Today, there is only 60,000 square feet available for immediate occupancy, with another 130,000 becoming available for occupancy in October.

Nor is 500 Mamaroneck the first purchase in Westchester for the Malkins. In 1996, another Malkin-led investment partnership bought 711 Westchester Avenue in White Plains. It mined out to be one of the county's major turnaround successes of the decade: 711 was empty when acquired, and was fully renovated and fully leased to 18 tenants within 18 months.

As at 711 (where renovation is now complete), substantial upgrading is in the works at 500 Mamaroneck. W&M Properties is supervising the investment of an additional $12 million in a comprehensive improvement and new amenities program during the next 12 to 18 months. Common area lobbies, corridors, elevator cabs and bathrooms are being completely renovated. A new, tenants-only multi-media conference facility, a state-of-the-art tenants-only fitness center with locker room facilities, an upgraded and expanded dining facility, new and improved external and internal signage, and enhanced landscaping are all part of the program. In addition, 500 Mamaroneck will provide the only 24-hour concierge service and security in the Westchester East marketplace, and a tenants-only shuttle service to and from the Mamaroneck Metro North train station.

Our goal is to create the preeminent Class A multi-tenant office building in Westchester County's strongest sub-market.

Jeffrey H. Newman, Senior Vice President, W&M Properties

COPYRIGHT 1999 Hagedorn Publication
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