It turns out that in the last 18 months larger tenants of commercial space in Westchester County have agreed to longer lease terms in Westchester.
And no surprise – longer terms were had by the tenants with the largest space.
The average length of a commercial lease has increased to just shy of 10 years for tenants in larger spaces, according to a chart prepared by Jones Lang LaSalle, a Stamford-based financial and professional services firm that specializes in real estate.
For tenants signing on for less than 10,000-square-feet the average term is 5 to 7 years, shows the chart that accompanies this post. The number inches to 7.4 years for tenants leasing between 10,000 and 20,000-square-feet. And, the number jumps to nearly 10 years for the county’s larger tenants occupying more than 20,000-square-feet.
This shows how space and company size are related to length of a lease term in the current market, said Erin Patterson, a research manager at JLL. “You are able to negotiate a shorter term if you are a smaller space tenant. And for the property owner there is less risk in signing a smaller tenant for a smaller period of time. In Westchester the sweet spot in size range is 10,000 square feet.”
One problem of late, she said, is a lack of updated high quality space.
“Some space is functionally obsolete and not renovated. There is a death of higher quality new construction,” she added, noting that some “for lease” signs are for spaces that may be difficult to rent to tenants who want and need state-of-the-art space.
While no new office buildings anticipated there are several major renovations underway, says JLL in an earlier report.
These include: 1 Gannett Drive (where The Journal News formerly had its offices) to a fitness/lifestyle facility, 500 Westchester Ave. to a healthcare facility, 102 Corporate Park Drive to a lab space and 103/105 Corporate Park Drive to multifamily housing.
Leasing activity shows a shift from buildings near transit hubs.
Also of note, the first quarter of this year showed tenants are eager for new and larger leases rather than renewals of current space.
“The shift towards relocations rather than renewal signals more business confidence as local tenants are more willing to consider the upfront capital associated with moving.” A major factor in leasing activity growth is a strong labor market to feed the demand for space, JLL concludes.