Continuing Recovery of Downtown White Plains Office Market Fuels Strong First Quarter Results for Westchester County

Stamford, CT (April 5, 2000) - Energized by the growth of internet and telecom companies in a newly resurgent Downtown White Plains, the Westchester office market began the new year in spectacular fashion with robust leasing activity, solid absorption and declining availability rates, according to the Insignia/ESG First Quarter Commercial Market Report released today.

More than 712,140 square feet of space was leased countywide in the first quarter of 2000, a 16% increase over the same period a year ago. First quarter net absorption swelled to 310,140 square feet compared to just 44,640 square feet of positive absorption in the first quarter of 1999. A 22% decrease in the total supply of available space in the county led to the removal of more than four percentage points from Westchester's availability rate of a year ago. At 13.8%, this availability is the lowest in more than 10 years. Westchester's average asking rent rose 15 cents from 1999 to $23.82 per square foot.

While most of Westchester County experienced impressive growth during the first three months of the year, activity in the booming White Plains CBD accounted for the lion's share of the market's positive results. In fact, the city center saw 38% of the county's total leasing and 62% of its absorption. Five of the Westchester's ten largest lease transactions took place in the CBD, including the most significant - Metromedia Fiber Network's 79,650 square feet at 360 Hamilton Avenue. Internet and telecommunications companies dominated the city's leasing velocity nearly 79%, or 210,700 square feet, of all space leased involved these firms. Two of the deals InSite Services' 42,570 square feet at 44 South Broadway and Greenwich Technology Partners' 29,400 square feet at 123 Main Street - involved relocations from outside of the county Manhattan and Stamford, respectively. As conditions continue to tighten in neighboring markets, the number of relocations into Westchester is expected to increase.

In total, the White Plains CBD saw a 53% increase in leasing velocity during the first quarter of this year versus 1999. At 268,220 square feet, this segment experienced the most activity of any of Westchester's submarkets. A continuing absence of space returned to the city's available inventory also led to almost 192,650 square feet of positive absorption over the past three months - a dramatic increase over the 26,470 square feet recorded during the same period last year. As a result of these events, the city's notoriously high availability rate fell almost 11 percentage points to 19.4% -- the lowest in recent history.

Perhaps as significant as the CBD's incredible drop in availability, however, was the visible chipping away at the supply of large blocks of space - historically the city's albatross. According to Dean Shapiro, Executive Director of Insignia/ESG's Westchester-Connecticut office, "the amount of space found in contiguous blocks of space measuring more than 100,000 square feet fell nearly 62% compared to last year following several transactions that broke up these blocks into more flexible pieces. In fact, only three blocks of space are currently available in the city that can accommodate tenants of that size compared to six a year ago. Clearly, the capital investments that building owners recently made to many properties are really paying off. Formerly troubled buildings like 360 Hamilton Avenue and 120 Bloomingdale Road have taken advantage of the recent economic upswing and are almost 100% occupied."

While the flexibility of many properties to lease space in smaller increments has chewed away at these blocks of space, the increase in larger size transactions done not only in White Plains, but countywide, has influenced the drop. Of the total space leased in Westchester in the first quarter, 46% involved transactions measuring 20,000 square feet or more versus 38% of last year's velocity in the same time frame.

Mr. Shapiro said the strength of the results in Westchester in the first quarter is additionally significant because the first quarter is often a slow time for the county's office market. "The momentum from 1999's record-shattering results has obviously carried over into 2000. From all indications, Westchester could once again be in for another outstanding year."

In addition to the Central Business District of White Plains, Westchester County's four other submarkets reported the following first quarter results:

Westchester East While Westchester's largest submarket was slightly outperformed by a resurgent White Plains CBD in the first three months of this year, the East still experienced notable progress during that time. Leasing activity rose 11 % from last year to nearly 175,670 square feet of space and net absorption improved from negative 16,510 square feet to positive 81,580 square feet. Accordingly, the segment's availability rate dropped more than four percentage points to 13.4%. And, while the East's average asking rent lost some ground compared to last year, it is still the highest in the county at $25.32 per square foot. Major lease transactions in this submarket included the Chubb Group of Insurance Companies' 37,300 square feet at 1311 Mamaroneck Avenue in White Plains and Ameritrade/On Money's 29,280 square feet at 1109 Westchester Avenue in White Plains.

Westchester West

The western part of the county saw the most impressive results in the first quarter of 2000 compared to last year. Leasing activity in the submarket totaled 165,640 square feet - 23% higher than a year ago -and net absorption reached 63,480 square feet - a significant reversal from negative 11,440 square feet in the same period of 1999. As a result, the West's availability rate dipped three percentage points from a year ago to 11.5% -- the lowest level in Westchester County. Velocity at Taxter Corporate Park in Elmsford and 520 White Plains Road in Tarrytown accounted for much of the improvement, as nearly 52% of the submarket's total leasing took place in these buildings. In fact, the segment's two largest transactions -Nextel of New York's 50,170 square feet at 565 Taxter Road and Liberty Mutual Insurance Company's 29,280 square feet at 520 White Plains Road - were among those completed at these properties. Average asking rent fell slightly to $22.64 per square foot.

Westchester North

Westchester North experienced a temporary increase in its available inventory in the first three months of the year following space returns by tenants including Nortel Communications and Humanities and Alstom USA, Inc. The segment's 12.1 % availability rate, however, remained relatively unchanged compared to the same period last year. Several transactions expected to close by midyear in this submarket should offset the 60,150 square feet of negative absorption of this quarter as well as improve leasing velocity, which totaled just 30,270 square feet thus far in 2000. Asking rent in the North rose 49 cents per square foot from last year to $23.99 per square foot.

Westchester South

The county's southern submarket saw continuing positive results in the first quarter of 2000. Leasing activity in the South almost doubled the first quarter of last year at 72,340 square feet, and absorption of 32,590 square feet paralleled 1999's level for the same time. Consequently, the segment's availability rate as of March 2000 decreased almost a percentage point from last year to 11.8%. The South's average asking rent rose $3.12 per square foot compared to 1999, primarily due to the availability of top-grade new space at New Roc City. At $19.69 per square foot, however, this rent is still the lowest in the county. The submarket's largest transaction was Montefiore Medical Center's 30,000 square feet at 3 Executive Boulevard in Yonkers.