Class A rents will continue to rise over the next year as New York City businesses and professional firms join expanding Westchester tenants in scrambling to contain office space costs, a trio of Westchester real estate owner-managers agreed at a panel discussion this morning.

Speaking at “Real Estate in Westchester County: Public vs. Private Ownership,” held at the Hilton Rye Town hotel in Rye Brook, the panelists said Westchester owners should capitalize on continued growth in demand, especially for downtown White Plains, as well as availability of refurbished multi-tenant space east of the county seat.

The talk was co-presented by the Business Council of Westchester and the Commercial & Investment Division of the Westchester County Board of Realtors, and was part of the business council’s KeyBank Speaker Series.

Panelists cited two available sites -- Robert P. Weisz’s 1133 Westchester Ave. in White Plains, where a half-million square feet has hit the market, and the Platinum Mile portfolio of RexCorp Realty L.L.C., now in the middle of a $30 million renovation it hopes will push its occupancy past the current 80-percent leased.

Rents along I-287 should surpass $30 psf, while downtown White Plains commands the county’s highest office rents at about $40 psf.

“To see $50 per square foot rent in less than two years would not surprise me,” said John Saraceno Jr., a principal with Onyx Equities L.L.C. of Woodbridge, N.J.

He also predicted rents will rise high enough to finally allow for spec development of new Westchester office buildings for the first time in two decades: “Within the next 12 to 24 months, there will be a spec building built on the east side of the county.”

Saraceno’s Onyx Equities expanded into Westchester late last year when it joined with a Pennsylvania partner to acquire the 320,000-square-foot 1311 Mamaroneck Ave. from The Jack Parker Corp. of New York City – a deal you read about first in Deals & Deeds (Nov. 7, 2006) .

After the panel talk, Saraceno said 1311 Mamaroneck still has two available spaces totaling 25,000 square feet. Asking rents for recent deals have been in the high-$20s per square foot: “We’ll see about $30 per square foot in the near future.”

Jeffrey Newman, executive vice president with W&M Properties in Stamford, Conn., said Westchester buildings like the two it leases and manages will continue to capitalize on tenants seeking cheaper rents than what they can find in Manhattan or downtown Stamford.

Partners in W&M own 500 Mamaroneck Ave. in Harrison and 10 Bank St. in downtown White Plains. 10 Bank commands the highest asking rent in downtown White Plains at $40 psf.

In Stamford, W&M also seeks some of the highest rents in the market -- $60 psf asking rent for space at Stamford Metro Center. Stamford rents, he said, should keep rising given not only market demand but the recent acquisition of a key office landlord, Equity Office Properties, by Blackstone Group L.P.

That rise, he acknowledged, may push some smaller tenant businesses out of Stamford.
“I don’t think all those companies are going to move north to Norwalk. A number of them are going to move south to Westchester,” Newman said.

George Constantin, president and chief executive officer of Heritage Realty Services L.L.C. of New York City, said he remains optimistic about the allure of Westchester and the White Plains area for prospective tenants: “I feel very comfortable about the market in general.”

Heritage expanded into Westchester in 2005 when it bought 2 and 4 Gannett Drive in Harrison (White Plains address). Last year Heritage shelled out the biggest per-square-foot price up to that time [$219 psf] for 3 Gannett Drive (also Harrison with a White Plains address), a 161,000-square-foot building whose tenants include the law firm Wilson Elser Moskowitz Edelman & Dicker L.L.P. and Deals & Deeds parent Westfair Communications Inc.

The Gannett Drive buildings are 90 percent leased (though 3 Gannett is fully leased), with Heritage working on deals to push occupancy to 93 percent, Constantin said.

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