Taking a look at one of our major markets, the Westchester commercial real estate market continues to gain strength with various levels of activity across the multifamily, mixed-use, retail and office building sectors in the first quarter of this year.
As a very visible sign of confidence in this market, the Simon Property Group is planning to make multi-million dollar renovations to the Westchester Mall in downtown White Plains beginning this month with completion scheduled for early next year. This is the first time the mall has undergone extensive renovations since it opened in 1995.
In the multifamily and mixed-use markets, we recently brokered the sale of four buildings located in lower Westchester County, exclusively representing the sellers and sourcing the buyers in multiple transactions that totaled $12 million. Capitalization rates on these properties, which are located in Yonkers, Mount Vernon and New Rochelle, ranged from 6.5% to 7.9% on current net operating income. All of these transactions closed during the first quarter of 2015.
In another sign of confidence in the future of Westchester, this time in the commercial office market, the Somers office building that will be vacated this year by PepsiCo is said to have been purchased by a company linked to Carlos Slim, the world’s second richest man behind Bill Gates, according to Forbes magazine. Plans for the nine-story, 540,000-square foot building on a 200-acre campus have not been disclosed.
As the fiscal health of the county continues to improve, the unemployment rate for Westchester County now stands at 5.2%, a bit lower than it was one year ago, while total employment over that time period has risen by 1.2%. Despite this growth, office-using space, the historical driving force in the office market, has seen only nominal gains. However, the trend of adapting existing office space for other uses, such as medical offices, has continued to grow, leading to a boom in mixed-use developments within the county. For the remainder of 2015, office-using employment is expected to grow by 2.5%. As a result, the county can expect steady demand in the more prominent submarkets as occupancy levels continue to stabilize.
We believe that it is important to remember that you can find good opportunities in every market, especially when you have the right local partner.
With offices in New York, Massachusetts and Connecticut, our investment sales teams at Northeast Private Client Group are well-positioned to support commercial real estate investors looking to find good opportunities across the region. If you’re a property owner or an investor in the mid-market segment and want to discuss the content of this blog or your investment goals for next year and how we can help you achieve them, please give us a call. We look forward to listening and sharing our knowledge with you.