Can White Plains Achieve Its Potential?
Analyzing the city’s future (growth?) in business.
Westchester One, in White Plains, is the county's largest class-A office building.
An overall moribund office-leasing market in Westchester County has had few bright spots lately, although the White Plains Central Business District (CBD) started the year on a positive note. Actively observing and participating in the White Plains commercial real estate action from the vantage point of three different firms are 37-year real estate veteran John McCarthy and his two sons, Kevin and Mike McCarthy.
“We like to joke around the dinner table that we have great market share in the family,” says Kevin, a VP at CBRE in Stamford, Connecticut. Younger brother Mike is an associate director at Cushman & Wakefield, which recently moved its Westchester office to The Ritz-Carlton, Westchester in White Plains.
Their father, John, principal of McCarthy Associates in White Plains, represented law firm Jackson Lewis LLP when it moved from One North Broadway where it was a major tenant, to both Westchester One at 44 South Broadway and 1133 Westchester Avenue late last year. Mike participated in the other side of the deal as agent for Beacon Capital Partners, owner of Westchester One. His firm also secured long-term leases at Westchester One from the New York State Department of Taxation and Finance and the New York State Department of Law. The three new tenants took a total of 123,570 square feet of space in Westchester One, the largest class-A office building in the county.
In the first quarter of this year, the slight upswing continued as the White Plains CBD saw 50,000 square feet of positive space absorption, according to CBRE. This was fueled by two of the county’s top five transactions, Fortistar Capital Inc.’s 18,266-square-foot renewal and expansion at 1 North Lexington, and law firm Cabanillas & Associates P.C.’s 14,384-square-foot lease at 120 Bloomingdale Road.
What drives the White Plains market? “No place else in the county has an urban infrastructure like White Plains,” says Kevin. “You have several highways as well as the train station, the bus terminal, and a large inventory of commercial office space.”
Mike adds, “We represent 140-150 Grand Street, which is the closest class-A office building to the courthouse, so we get a lot of law-firm interest in that building. It’s also close to shopping, banks, and the train station. When your employees don’t have to get in their cars and drive 10 minutes to get a bite to eat, it increases productivity.”
Even given the White Plains CBD’s unique attractions, the office vacancy rate remains in the 25-pecent range, according to Jones Lang LaSalle. That makes it higher than the county as a whole, which is closer to 20 percent. The culprit? Primarily the age of properties in the market, according to Mike. “Just like in much of Westchester, [White Plains] doesn’t have newer product available,” he says. “Repurposing buildings helps tighten up the office space market, but that’s not generally an option in downtown White Plains.” (Existing office buildings in the CBD don’t have the parking to handle healthcare traffic and many already have retail tenants on lower levels.)
On the other hand, rents in the CBD are generally higher than elsewhere in the county, about $30 in White Plains versus $27 overall. “White Plains is always going to command higher rents because it is the Manhattan of Westchester. It’s a bustling place,” Mike says. “People want to be within walking distance of the train and be within an urban feel.”
On the other hand, according to Kevin, “One of the interesting things is the price differential between Stamford, Connecticut, and White Plains.” In Stamford, premier product can achieve $60 to $65 per square foot—something he attributes to tenants being more willing to pay higher rates in Fairfield County.
Given the glut of office space throughout Westchester, it may be a few years before any commercial space in the county reaches those price levels. If it’s going to happen, though, it may well be in White Plains.