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October 19, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Following strong leasing run, new Westchester One tower owner plans renovations

Under new ownership, the Westchester One office tower at 44 S. Broadway in White Plains booked 90,000 square feet of leasing activity in the final months of 2017 and the start of the year. With its new owner ready to start a multimillion-dollar capital improvement campaign, the building’s leasing team at Cushman & Wakefield said Westchester One will remain among the county’s premier office addresses.

The 21-story, 907,000-square-foot office tower is a year into its new ownership. Argent Ventures LLC., a private Manhattan real estate company whose holdings include Grand Central Terminal, bought the building for $138 million in June 2017 from Beacon Capital Partners.

Michael McCarthy, Steve Baker and Matthew Lisk, part of the Cushman & Wakefield leasing team at Westchester One. Photo by Ryan Deffenbaugh.

The Business Journal met recently with part of the building’s leasing team at Cushman & Wakefield — Steve Baker, Matthew Lisk and Michael McCarthy — to discuss renovation plans at the building and its position in the market. The team, along with Josh Kuriloff, represented the landlord on leases at the end of 2017 and to start the year.

Those deals included a 46,682-square-foot renewal from Willis Towers Watson, one of the largest tenants at the property. CBRE Group Inc. represented the tenant. French multinational banking and financial services company Societe Generale renewed a 17,728-square-foot lease,
also represented by CBRE.

Senior Home Care, a nursing agency that operates throughout the tristate  region, signed a new lease for 9,982 square feet in the building toward the end of 2017. As did Cognetic Capital Advisors, which will take 3,286 square feet on the 11th floor of the building that it will use as a new headquarters in a move from Manhattan.

Baker said the last year was a strong one for the downtown White Plains office market and properties such as 44 S. Broadway will continue to drive leasing.

Big floor plates

Westchester One was built in 1976 by Scarsdale company Bianco & Pepe and was originally home to IBM. The building was said at the time to be the tallest between New York City and Albany. While it has since been surpassed for that title, Westchester One remains the county’s largest office building by square footage. Bianco & Pepe sold it to Beacon Capital in 2006 for $172.5 million.

Six months before Argent bought the building, New York Life announced it signed a lease for 140,000 square feet. The insurance company moved 500 of its Westchester County employees to four levels in Westchester One from its former office complex in Sleepy Hollow, which it sold to Regeneron Pharmaceuticals Inc. for $50 million that same year.

Landing a blue-chip company to anchor the top four floors of a building is pretty big deal. It gives the building clout, the Cushman & Wakefield team noted, but also provides a great touring space and future neighbor to lure in other tenants.

“It’s a great example of what’s possible,” Lisk said. “With the big floor plates — 44,000-square-foot floor plates — you’re able to achieve densification that you’re not able to do anywhere else in downtown White Plains.”

The New York Life deal represents one of the most significant trends driving the Westchester County office market. Employers believe top talent, particularly of the millennial age group, want to be downtown. That means wooded, suburban campuses are out and downtown spaces near trains are in.

Pair that with the conversion of underutilized office space to apartments, such as at 440 Hamilton and part of 1-11 Martine Ave., and the city’s office vacancy rate is expected to continue a steady descent. Cushman & Wakefield measured the White Plains downtown office market to be about 18 percent vacant at the end of the first quarter. McCarthy said the number could reach 15 percent this year, compared with 24 percent 18 months ago.

Despite some big name holdings, Argent’s management keeps a relatively low profile. The firm was founded in 1997 and has bought more than $2.5 billion in real estate assets and debt instruments in major markets in the United States and Europe, according to its website.

The company has been involved in a significant mixed-use project in Tarrytown. In 2015, an entity controlled by Argent sold a 100-acre undeveloped parcel of land to Regeneron for $73 million next to the pharmaceutical company’s headquarters at Landmark at Eastview in Greenburgh.

A joint venture between Argent, LCOR Inc. and the former Lehman Brothers also sold the developed part of The Landmark campus to BioMed Realty Trust Inc. in 2007 for $98.5 million. Argent’s website notes the joint venture also sold a nearby development site in Hawthorne to Home Depot in 2006. In January 2017, Regeneron purchased The Landmark from BioMed for $720 million.

Modernization

While the exact amount Argent plans to invest in 44 S. Broadway isn’t specified, Cushman & Wakefield noted the new ownership is planning a multimillion-dollar renovation into the building starting next month. Plans call for an expanded cafeteria, designed to operate similar to food halls in Manhattan, along with new tenant lounge areas, art gallery space in entrance hallways and outdoor seating.

Beacon Capital already invested about $13 million in renovations to reposition the building in 2008. The focus for this round of investment from new ownership is on modernizing amenities and adding features unique to the area.

“This type of New York City-amenity package doesn’t exist in Westchester,” Lisk said. “They’re trying to bring that up to the suburbs.”

The new ownership will also invest in upgrades to its parking garages, elevators and infrastructure.

Westchester One has about 90,000 square feet of space available, though sectioned off into smaller blocks. The largest block available is about 66,000 square feet. The market has tightened to a point where any space larger than that is difficult to come by.

“If you talked to us a year-and-half ago, you’d have a host of options,” said McCarthy. “With New York Life — and couple other large leases signed— for tenants looking for 50,000-plus square feet, there’s not a lot of games in town.”

That means rents in White Plains are likely to climb. Lisk noted the vacancy rate in the city’s downtown is approaching pre-recession levels.

“We think similar rents will be achieved,” Lisk said. “Where they were doing deals in the very high 30s and low 40s (dollars per square foot). We think we’ll be pushing $40-plus rents.”

Westchester One is next door to a 4-acre dirt lot in the middle of downtown where the Westchester Pavilion shopping plaza once stood. While it’s not the prettiest sight currently, the broker team said the plans to eventually build mixed-use apartments, from Lennar Multifamily Communities, and elsewhere in the city will only help neighboring office properties.

“White Plains is embracing the live, work, play model,” McCarthy said. “And it’s going to benefit not only 44 South Broadway, but every Class A landlord will reap the benefits from that.”