The 2025 year end real estate market reports have come in. The Newmark Report shows about 1.3 million square feet in leasing volume, which has been pretty typical post-pandemic. Pre-pandemic we used to do about 2 million square feet per year, but in a larger market. I have written in many of my reports that our market has shrunk from about 32 million square feet in 1986 to about 24 million square feet in 2026, or about one-third.That also means that our newest office buildings are, at minimum, 40 years old.  

There is lots going on in White Plains. Demolition of the long-shuttered Galleria Mall should start this year, which is just the beginning of this 10-12 year project. The entire mall and its parking structures will come down. The parking garage (all underground) will have to be excavated, and the fill removed and trucked out. This will remove hundreds of parking spaces from the CBD during the long construction period. The foundations and other underground infrastructure will have to be constructed, and 8 buildings (up to 40 stories tall) will be built. It will be transformative for the City, with 50% open space including restaurants with outdoor dining and other retail and entertainment venues and views in all directions at ground level and from the apartments.   

There is also a new headquarters for the New York Power Authority currently under construction as part of Hamilton Green. What was planned as four multi-family residential buildings will now be 3 residential buildings and the new 310,000 square foot state of the art headquarter for NYPA, which will be owned by the agency. It will keep over 1,000 jobs in White Plains and will be the most sustainable, energy-efficient efficient building in the county. No concrete plans for the old headquarters (one block away) yet, but it will likely be demolished or converted to another use.  

An old office building on Church St. is being converted and expanded into new affordable for-purchase condominiums. It is part of a NY State initiative to offer lower income Westchester County residents the ability to purchase homes in our very expensive market. New York State is offering a series of incentives and grants to keep prices affordable.

More important than the statistics in my opinion is the huge amount of “shadow space” in Westchester, which appears to be available but is not. The hybrid and remote work norms created during the pandemic and the increasing costs of operating buildings and real estate taxes along with the significantly increased costs to do tenant buildouts all contribute to owners’ inability to transact with new tenants. This will only increase over time, as the costs to reposition old office buildings with new lobbies, public corridors and restrooms continue to climb. No matter how much redecorating is done on these buildings, they are all still a minimum of 40 years old with single pane glass and antiquated HVAC systems.  

I represented a long-time client of mine in a 26,000 square foot lease transaction in Q4. My client's new space was 50% larger than its old space. Other tenants are taking advantage of their ability to move to better quality, more amenitized buildings while taking somewhat less space, so their overall occupancy costs stays stable.  Many tenants are also able to make very advantageous renewal deals. No landlord wants to lose a tenant today, particularly with the high cost of downtime, new construction, legal fees and commissions to refill it. Rent rollbacks are definitely achievable for these tenants, as operating expense and real estate tax escalations over a lease term frequently put existing tenants at an over-market occupancy cost. Keeping a tenant is a big win for the landlord, even at a reduced price, instead of having more vacant space in their building. 

There is some optimism in the brokerage community about 2026. We have an interesting market now for tenants. Statistical rents are actually rising. Why? Because older, lower-rental rate obsolete buildings are being taken off the market, which shrinks the number of buildings where deals can be made. So even if demand remains flat, supply has decreased. The owners of the better buildings have invested more capital in them, so they have a better product. Those tenants that are right-sizing due to remote and hybrid work can keep their occupancy costs stable in a better building at a higher rent. 

Stay tuned. It will be an interesting year.  There are definitely advantageous deals to be made, whether for relocations or renewals. But tenants need a professional guide.

 I’ve been through many market changes and financial crises in my 40 years in the Westchester market. This is definitely a new chapter, but one that requires experience, skills and creativity to get the job done for my clients.

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