The office rental market in Westchester just had its best first quarter in years thanks to upcoming construction of the new Tappan Zee Bridge and the county's exploding biopharmaceutical industry, according to real estate experts.
Tappan Zee Constructors, the consortium of contractors hired to begin building a $3.9 billion new replacement span later this year, signed one of the quarter's biggest deals by renting 30,780 square feet at 555 White Plains Road in Tarrytown, right near the bridge.
There are also one or two more bridge construction-related deals immediately pending, said Kevin Langtry, senior associate for the commercial real estate giant, CBRE Inc.
Also new to the area, Tishman Construction Corp., a leading construction management company, has taken 15,000 square feet at 303 South Broadway, Langtry said.
"Sometimes companies need to grow and expand," Langtry said. "It will be interesting to see if there are other little spaces they will need to plug people into."
These contracts were among a slew of new leases that helped boost Westchester's office leasing by 40 percent compared to first quarter averages for the past five years, said a recent CBRE report. The report did not specify total dollar amounts but noted that the average asking price for Westchester office rents is up more than 1 percentage point from last year to $26.75 a square foot.
However, actual market improvement is "relative" after factoring "some of the five worst years" in the business following the 2008 real estate market crash, Langtry cautioned.
"It doesn't mean that we're back to pre-downturn boom times but progress is being made," he said.
In all, some 409,015 square feet of office space was leased out in the first quarter in a market dominated by a surge in tenant demand for larger locations. And 62 percent of the new leases are "sizable deals" on spaces larger than 20,000 square feet, said Langtry. In years past, most tenants were looking for locations that are 10,000 square feet or less.
Despite the uptick in new leases during the first quarter, about 288,718 square feet in office space was returned to the market as tenants either moved away, downsized or relocated to other addresses, noted the CBRE analysis.
But the numbers have the potential to change during the rest of the year. Langtry noted the positive impact of New York Medical College's April purchase of a 248,000-square-foot office building at 19 Skyline Drive, next to its Valhalla campus. As an addition to the school's facilities, "it makes a lot of sense," Langtry said.
The property, which already has a 115-seat auditorium, fitness center, cafe and a 720-space parking lot, is scheduled for renovation work this summer, according to a recent statement by college president Alan Kadish, who said the acquisition offers "the flexibility and growth potential we have been seeking."
In a related bright note that reflects the growth of local biopharmaceuticals, drugmaker Regeneron announced on April 4 it plans to add two new buildings with 300,000 square feet of laboratory space at its 590,000-square-foot headquarters at The Landmark at Eastview complex in Mount Pleasant. The expansion is expected to create 400 new jobs.