Op-Ed By Howard E. Greenberg President, Howard Properties, Ltd.
Every week, I hear the same thing from prospective office tenants: “Vacancy rates are high. We’ll get a steal.” Many assume landlords are desperate, and that rents must be at historic lows. But here’s the reality: despite widespread reports of empty office space, Westchester’s office market is much tighter than people realize.
As someone who’s worked in commercial real estate in this region for nearly 40 years, representing tenants and buyers, I see this firsthand every day. I speak regularly with landlords, brokers, and other professionals. The narrative you’re reading in national headlines doesn’t reflect what’s happening here in Westchester.
Let’s look at the facts.
Westchester’s total office inventory has shrunk by approximately 25% since I started in the industry, dropping from around 32 million square feet to roughly 25 million. That number is still declining as obsolete properties are demolished, converted to residential or medical uses, or repurposed in other ways.
With almost no new office construction on the horizon, a result of high financing costs and weak speculative demand, our existing stock is aging fast. Most of the county’s office buildings were constructed during the boom between the mid-1970s and mid-1980s. That means they’re now over 40 years old and, in many cases, functionally outdated.
While demand for space is down, it’s not as simple as “high vacancy = cheap rents.”
Landlords today face soaring expenses. The cost to build or renovate office space has doubled in the past five years. Let’s say a tenant wants to lease Class B space for $27 per square foot. If the landlord needs to spend $80 per square foot to build out that space, which is standard in today’s market, that’s already the equivalent of three years’ gross rent.
But it doesn’t stop there. Landlords also absorb operating costs, roughly $15 per square foot, which covers heat, air conditioning, maintenance, snow removal, insurance, and taxes. That leaves a net income of just $12 per square foot. Out of that, they must pay mortgage debt, finance tenant improvements, pay legal and brokerage fees, and still try to generate value for their building.
The result? Landlords can’t afford to do deals shorter than seven years unless no renovations are required. And even then, many simply don’t have the capital to fund buildouts. Some can only offer cosmetic refreshes, such as paint and carpet, which today costs over $10 per square foot.
Demand isn’t dead, it’s just different. Most of Westchester’s active demand comes from small and mid-sized businesses seeking spaces under 10,000 square feet. But much of our remaining vacant inventory is in large blocks, often 50,000 square feet or more. These deep floorplates, designed for corporate tenants of the past, are tough to divide and reconfigure for smaller users.
At the same time, the shift to hybrid work means office space must now offer more than just desks and walls—it needs to attract employees back in. Tenants are demanding bright, modern, amenity-rich environments that align with today’s flexible workstyles. And many older buildings simply don’t meet the mark.
Because so few landlords have the financial capacity to do deals, the number of available, transactable office spaces is far lower than it appears. On paper, vacancy may seem high, but functional, well-located, move-in-ready options are increasingly scarce.
Buildings are being repurposed or removed from the market entirely. And those that remain face rising costs, tighter financing, and increased tenant expectations.
So don’t let headlines mislead you. Westchester’s office market isn’t oversupplied, it’s just evolving. And tenants looking for great space at rock-bottom prices may be surprised to find the pickings are slimmer than they thought.
Howard E. Greenberg is President of Howard Properties, Ltd., a Valhalla-based commercial real estate brokerage firm representing tenants and buyers throughout Westchester County and throughout the United States. With nearly four decades of experience, he is a recognized expert on regional market trends and office leasing strategies. (https://howprop.com/)
