Westchester office market expected to weaken
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- November
- 13
Westchester County’s commercial real estate market is likely to slump further as the region feels continuing aftershocks from the weakening economy, the credit crunch and the Wall Street slowdown, an economist said.
The office vacancy rate in Westchester has increased from 12 percent to 16 percent since the end of 2006 and could jump as high as 19 percent during the next 18 months, said Barbara Byrne Denham, chief economist at Eastern Consolidated, a New York-based real estate investment services firm.
“The recession is still in front of us,” Denham said. “We still haven’t seen much in the way of job cuts yet, but we will.”
Denham spoke today in White Plains during a luncheon meeting of the Building Owners and Managers Association of Westchester County.
Much of the region’s fortunes revolve around the Wall Street securities industry, which accounts for only about 5 percent of the employment base in New York City but 25 percent of the salaries because of the richly paid investment bankers.
New York City has already lost 11,000 jobs in the securities industry as the brokerage houses struggle with massive suprime mortgage writeoffs and the stock market’s worst year since the Great Depression. (The S&P 500 is down 38 percent so far in 2008).
Denham said as many as 40,000 additional securities jobs could be lost in the Big Apple. In the latest example, Morgan Stanley, the second-largest brokerage company, announced plans Wednesday to cut 10 percent of staff in its institutional securities group, its biggest business. Westchester’s affluent suburbs are vulnerable because some of the Wall Street investment bankers who live there may be at risk of having their bonuses cut—or drawing unemployment checks.
“What is really scary about Wall Street is that we have become more dependant on Wall Street,” Denham added.
Despite the uncertainties, the region has held up better than some parts of the country when it comes to home foreclosures, according to Denham. The foreclosure rate in Westchester—1 foreclosure for every 1,384 homes—is well below the national average—1 foreclosure for every 500 homes. And it is far ahead of the state with the highest foreclosure rate, California (1 foreclosure for every 250 homes).
“We didn’t have the subprime problem that other parts of the country did,” Denham said. “In the long run that will be good for our economy.”
This entry was posted
on Thursday, November 13th, 2008 at 4:50 pm by Jay Loomis.
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