The county’s prestigious commercial real estate organization has frequently invited the veteran real estate broker and consultant to direct a lively and informative discussion with some of the industry’s prominent leaders about key developments in the Westchester market.
During his commentary, Greenberg said the market is changing in various and significant ways. He cited the flurry of mid to large-size transactions in the fourth quarter that led to an almost break-even net absorption of negative 21,600 square feet. “The fact that we were almost break-even—something that has not occurred for most of the last decade—was pretty amazing.”
He reported that the market was very slow in the first nine months when a total of 831,000 square feet was leased through September. But in the fourth quarter, 651,000 square feet were leased, led by PepsiCo’s 234,000 square-foot commitment at 1111 Westchester Avenue, bringing the year’s total to 1,482,000 square feet. In 2011, 1,600,000 square feet were leased with negative absorption of 600,000 square feet. In 2010, 1,800,000 square feet were leased but 220,000 square feet returned to the market.
He noted that the availability rate in 2012 was 17.4%, almost 1 percent less than the end of 2011 though the county still has more than 5,000,000 square feet of space available.
Of a total of 235 lease transactions, 73% were for office spaces less than 5,000 square feet, accounting for 25% of the total space leased. There were 60 leases for between 5,000 and 50,000 square feet, representing 43% of the space leased. Four transactions, each in excess of 50,000 square feet, accounted for more than 32% of the space leased.
He added: “There were lots of lease renewals as tenants are still reluctant to make major capital expenditures. This is a student driver recovery, he said: Step on the gas, step on the brake.”
He characterized PepsiCo’s commitment to Westchester as “huge” with its decision to renovate and expand the corporate headquarters in Purchase and to lease an additional 234,000 SF of office space during the construction period.
Another positive market development he cited was progress in the repurposing of older office buildings along 287 with the 200,000 square-foot Life Time Fitness project at 1 Gannett Drive and the bio tech firm, Histogenetics, at 102 and 104 Corporate Park, together taking a total of more than 400,000 square feet of space.
Another positive development in 2012 was the continuing growth of the healthcare sector as evidenced by WestMed’s increased presence in the county, occupying more than 400,000 square feet of space to date.
He voiced some concerns “The last new multi-tenant office buildings in Westchester were built in the mid-80s, making the county’s ‘newest’ product almost than 30 years old and many buildings closer to 40 years old. Developers cannot afford to build new office buildings today, as they cannot make a profit at current rental rates. How will Westchester be able to attract new tenants in the future with an aging office space inventory?”
Another problematic issue he addressed was one that the Westchester County Association’
Other key developments in 2012 that Greenberg reviewed were:
1) Reckson Associates Realty’s announcement seeking approval from Rye Brook to construct indoor hockey rinks on the land at Reckson Executive Park that was approved for 315,000 square feet of space. “This is a notable event. Not only is a traditional REIT getting into the sports and recreation business but the ice rinks will generate a revenue stream from land that has long been vacant and awaiting development,”
2) The construction of the new Tappan Zee Bridge will drive leasing of new space on the west side of the county for New York State agencies, contractors and engineering firms.
3) Hurricane Sandy is forcing owners and tenants to take a harder look at damage and destruction clauses in their leases. Many more companies and building owners will implement or review their disaster preparedness plans in the wake of this storm.
The panelists included David Friedman, Director of Real Estate, Montefiore Medical Center; Justin Krebs, Principal-Region Head, Normandy Real Estate Partners; John Barnes, Senior Vice President and Senior Director, Reckson, division of SL Green, and Al Gutierrez, Vice President of CB Richard Ellis.
The BOMA appearance followed a notable year for Mr. Greenberg whose career began 26 years ago. In November, he won the prestigious “Lease of the Year” Award from the NAIOP, the Commercial Real Estate Development Association’
The new year also marks a milestone for Mr. Greenberg. It will be 15 years since he established Howard Properties Ltd. which specializes in tenant representation and real estate consulting for corporations, privately held companies, law firms and not-for-profit organizations. Over the years, he has also completed lease transactions and consulting services for clients in 20 states. He is also the only office broker in Westchester to have attained the Society of Industrial and Office Realtors (SIOR) designation, granted only to brokers meeting stringent qualifications that certify their expertise.
Howard Properties, Ltd. is an affiliate member of CORFAC International, an association of independent real estate brokerage firms represented in more than 150 markets in The Americas and internationally.