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January 05, 04 Reader Services |
Upbeat forecast for 2004 Happy new year seen for county's economy
Westchester's economy should benefit from the recovery taking shape across the nation in 2004, making the next 12 months a mostly happy new year indeed, a consensus of observers agree. From an accelerating pace of job creation to good news on the real estate front, 2004 promises to be the first upbeat year for the county's economy in four years, a dozen economists and professionals said in interviews this month. Sean MacDonald, regional economist for the state Department of Labor, said she expected the rate of year-to-year job creation in Westchester to rise next year, as it did when it rose from around a half-percent in the spring to 0.9 percent in October, before taking a seasonal step backward to 0.5 percent in November. Among private-sector job categories that grew the most in recent months are construction and retail – both reflecting redevelopment projects in White Plains and other Westchester cities, MacDonald said. "With signs of the national economy improving, it will certainly provide an additional boost to Westchester County and the rest of the region," MacDonald said. Greg Werlinich, president of Werlinich Asset Management L.L.C. of Valhalla, said he expects the economy to pick up steam through June, due to low interest rates and new activity resulting from the tax cuts signed into law by President Bush last summer. "The first half of 2004 will probably be real good. I don't know how much higher the market can go after that. I don't think the market can maintain that level of increase," Werlinich said.
REAL ESTATE QUESTION A recovering economy, Werlinich said, will create pressure on the Federal Reserve to raise interest rates, as will a continued decline in the value of the dollar compared with the euro and other currencies overseas. But rising interest rates, he said, would hamper Westchester's real estate market by reducing home values and raising the cost of mortgages. Werlinich's concern about the housing market is not shared by P. Gilbert Mercurio, chief executive officer of the Westchester County Board of Realtors. He says the supply of new housing hasn't risen fast enough to meet demand, keeping prices high enough to withstand whatever increase the Fed makes in interest rates. Equally upbeat about Westchester in 2004 are observers of the county's office market, who say vacancy rates should continue a slow and steady decline recorded by most brokerages in the second and third quarters; fourth-quarter data doesn't come out until January. Salvatore J. Carrera, the county's director of economic development/real estate, said 2004 should see more news of corporate giants completing deals to base operations in Westchester. Cadbury Schweppes plc will move by April into 135,000 square feet at 900 King St. in Rye Brook, where it will combine offices for its Snapple and Mott's brands now scattered in white Plains and Stamford, Conn. Also by spring, Morgan Stanley will move 1,475 staffers to the old Texaco headquarters in Harrison, while New York Life will shift 1,000 employees from its New York City HQ to the Mount Pleasant Executive Center on Route 9. "I don't think it's going to stop. The momentum is there. We're aware of several corporate headquarters searches in progress," Carrera said. He declined to name the businesses involved. "If we're talking about Westchester, I feel very bullish," said Chris O'Callaghan, a principal with the White Plains commercial real estate brokerage McCarthy-O'Callaghan Company Inc. which represented 900 King St. in the successful talks with Cadbury Schweppes. "We've seen a lot of new activity. We're crossing our fingers that we're going to arrive at the big deals." Glenn P. Walsh, senior director with Cushman & Wakefield, said that despite the Morgan Stanley and New York Life deals, relatively few new leases in 2004 will be signed in Westchester by Manhattan businesses looking to spread out after 9/11. "It's really going to be a matter of internal growth," Walsh said. Walsh and O'Callaghan spoke Dec. 11 at the 5th Annual Commercial Real Estate Forecast and Holiday Luncheon presented by the board of realtors' commercial and investment division. Another speaker said he has seen an increase in the number of loans for office and retail development projects crossing his desk. "For me, it's a definite sign that things are getting better. And as the economy improves, you're going to see more deals," said John Komar, vice president and real estate lending officer with Commerce Bank.
BANK EXPANSION WAVE Commerce is one of several banks that launched expansions within Westchester this past year by opening the first of dozens of planned new branches. Commerce and other lenders like Charter One, TrustCo Bank, Webster Bank and Washington Mutual expect to gain new depositors and loan business from customers turned off by established banks following years of mergers. "We expect the bank to continue its aggressive expansion in 2004," said David Firestein, principal/regional director of Northwest Atlantic Real Estate Services, which represents Washington Mutual in its expansion wave. Firestein's brokerage found 48 sites across the region for Washington Mutual, including Mount Kisco and New Rochelle branch locations. All that bank expansion activity has been good for owners of shopping centers and other retail properties, says Jim Aries, vice president of acquisitions and leasing for Urstadt Biddle Properties, a publicly traded owner of retail properties based in Greenwich, Conn. "We've gotten offers from some banks that have exceeded market rents in our areas. A couple of years ago those banks were opening more ATMs. They're now back to full-service banking," Aries said. Barry Endelson, executive vice president of the Hartsdale retail real estate brokerage Aries Deitch & Endelson Inc., says banks and other retailers are stoking demand for new retail space enough for retail rents to rise in the new year, stimulating construction of additional retail space. In addition to retail projects, more construction activity will take place next year on the county's roads. The $187 million reconstruction of the Tarrytown interchange of interstates 87 and 287 is scheduled to be completed. And on the Taconic State Parkway, work will continue on a $62 million reconstruction of a section in Yorktown that started last fall. "How much more work we do will be dependent on what the state and federal governments ultimately do," said Ross J. Pepe, president of the Construction Industry Council of Westchester and the Hudson Valley Inc. Pepe, whose Tarrytown-based group represents 550 contractors and their suppliers in Westchester and seven other Hudson Valley counties, said the state is expected to maintain local road maintenance spending at least $1.65 billion. The extent of federal aid is even more of a question, Pepe said, since Congress is still hashing out how to reauthorize the Transportation Equity Act, which formally expired Sept. 30.
BLOSSOMING BIOTECH Less uncertain is the planned spring groundbreaking by New York-Presbyterian Hospital on the $265 million biomedical center on its White Plains campus on Bloomingdale Road. A second biotech project, Westchester County's up-to-$700 million "North 60" campus planned for the Grasslands campus in Valhalla, is in discussion stages between county officials and executives from developer-partner Mack-Cali Realty Corp. "As these projects begin to materialize, they have the potential to create serious growth in high-paying fields. They will give a boost to the regional technology sector, which has been struggling somewhat," MacDonald of the state labor department said. Christopher Furey, president of the public-private Westchester Technology Cluster, said tech businesses will fare better in 2004 than in the past few years as business customers spend more to consolidate their server systems and upgrade their equipment. Furey said many businesses and nonprofits will be forced to spend more on technology this year to comply with requirements of the Sarbanes-Oxley Act regulating public companies and the Health Insurance Privacy and Portability Act, which took effect for hospitals last April. "I don't think we're looking at a boom, but the fact many of our members have added a couple of new hires is always a positive sign" - especially for the cluster, where more than half of the 127 members employ 10 or fewer people, said Furey, the president of Savvy Networks USA in Tarrytown. In addition to technology and the roads, Westchester's hospitality sector will definitely see more construction activity in the new year, as two new hotels take shape on the Route 119 corridor in Tarrytown: Marriott's 145-suite SpringHill Suites, set to open in January, and a Sheraton hotel being developed by White Plains-based Starwood Hotels & Resorts Worldwide Inc. a quarter-mile east. A third new hotel could start construction in 2004 if Cappelli wins approvals for his $350 million "221 Main Street" hotel-condo-office complex catty corner to his City Center project. The complex calls for a 192-room hotel Starwood would christen with either its Westin or W brand. |
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Copyright 2003, Westfair Communications Inc. |