W E S TC H E S T E R CO U N T Y
Commercial Market Report
Q4-2025
THIS REPORT IS PREPARED BY
Executive Summary
Writer: Teresa Marziano, Real Estate Salesperson
FOURTH QUARTER 2025
The last twelve months have been marked by volatile business conditions across most economic segments and broadbased uncertainty. The national economy has faced unique challenges, such as adapting to an evolving tariff regime and a changing landscape of labor availability. These challenges continue. Artificial intelligence technologies are providing a new dimension of opportunities and risks, yet they are still in an emerging phase. Despite newness, this technology is increasingly permeating every aspect of business, and we are all exploring applying it in multiple areas of our life. Inflation is subsiding but remains stubbornly above The Federal Reserve target rate of 2%. This is a key concern for consumers and investors who recognize that achieving 2% inflation may take an extended period of time. The Federal Reserve is facing the difficult task of serving a dual mandate -price stability and full employment - when the path of variables they must control are impacted, in opposite directions, by changes in interest rates. Employment trends are cooling; less skilled labor is struggling and employers appear to be more demanding in terms of skills required. The impact of tariffs may delay achieving price stability, but the time frame is uncertain. As the Fed faces interest rate decisions, dissenting voices have been present in recent meetings underscoring the hurdles in interpreting the current economic landscape. An unpredictable business, economic and political background has led to delays in decision-making, particularly in smaller business. In this environment it is not surprising to see divergent opinions in critical forecasts. For example. the Federal Reserve of Saint Louis is forecasting moderating growth in Q4, 2025 – to less than 1.5 % at an annualized pace, however the Atlanta Fed’s algorithms expect growth in the same quarter to be approximately 3.0%. In the same way, credit spreads have fluctuated, reflecting maximum credit concerns in mid spring 2025 and a better credit environment at year-end. Payment processing firms Visa and Mastercard both reported seasonal holiday spending tracking around 4% (not adjusted for inflation) ahead of year-earlier levels despite consumer confidence drops reported in multiple surveys. The recently released Q3 GDP meaningfully surprised on the upside and the economy is entering 2026 on a strong footing. We could be on the verge of enjoying a surge in productivity, however, even small incremental gains in productivity would be beneficial in arresting the impact of inflation and encouraging clearer business trends. Commercial Real Estate investor interest is thawing after a hiatus in activity in 2024 and early 2025. Office buildings, which have had very little investor attention since the pandemic, are now trading hands. Some are finding a bid at deeply discounted valuations as compared to the last time they traded, but high occupancy offices near transportation hubs have fared significantly better. Prominent office leases in Westchester during Q4 were concentrated in White Plains home to some of the largest Class A office buildings in the county. In the retail space, Pickleball and Childcare Services dominated large leases and in Industrial, healthcare related equipment and supplies warehousing led the way. Wellness trends continue to dominate Westchester’s consumer demand. Overall, the County continues to benefit from low supply and healthy demand across property classes as corporates and households favor the infrastructure benefits the area provides. Price discovery continues in the property sector, at the National and local levels. Capitalization rates and pricing have reset in most markets. Smaller properties, typically the domain of owner-users, may have recovered some of the lost ground a little faster than institutional quality assets. Trophy and high amenity buildings have also captured improvements in pricing. The Trepp National TPPI (Equally weighted index. Trepp Inc.), which recorded 8,854 sales pairs in the latest quarter,
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Executive Summary
FOURTH QUARTER 2025
recorded a 0.43% increase and is up 2.25% from a year ago. However, it remains 8.01% lower than during the market’s peak. The index points to a market in which prices are no longer on the decline. At the National level, Lodging and Multifamily held back improvements in the index. While we do not have a local Westchester index, analysis of transactions indicates that multifamily residential pricing in the area has been firmer as compared to National trends. Despite robust multifamily development activity in Westchester, strong demand trends have prevented occupancy rates from dipping and have supported multifamily asset prices. Private capital remains the dominant funding source for CRE but investors are pursuing a range of debt sources, including banks, private credit insurance companies and agency financing, The first two are main funding sources for small projects while the last two are used by institutional borrowers. Across most geographies, institutional investors are returning to the CRE market, providing stronger liquidity to the overall market. Westchester Multifamily – Under Construction Pipeline Declines Sharply Affordability continues to be a headwind for renters and home buyers who want to live in Southern Westchester. Multifamily rental prices were stable in Q4 2025 when compared to the prior year. During 2025, deliveries of new units amounted to 4.5% of inventory, a very large number by any measure. Brisk demand helped absorb these units and vacancy was just over 5% at the end of 2025. Price stability in the face of very substantial deliveries underscores the strength of Westchester’s multifamily market. A recent sale of a 13-unit multifamily building in Mamaroneck (Brokered by Houlihan Lawrence) established a record in terms of price per apartment unit. The Marina Court apartment building is located at 422 E. Boston Post Road in Mamaroneck and sold for $11 million, representing $846,156 per unit. Amenities for the building include a rooftop terrace and fitness space. Westchester Retail – Trending Toward Stability. Retail projects in Westchester have enjoyed a favorable demand/supply balance over the last two quarters. Q4 was strong and vacancy declined modestly. Pricing has been rangebound over the last several quarters. Leasing activity and absorption have been driven by direct space. Pricing per square foot declined a few cents during Q4, mostly due to mix. The largest retail leases in the second half of 2025 were concentrated in the southern cities of Westchester County. Mount Vernon and New Rochelle’s landlords completed leases in open air shopping centers and big box-shopping centers. Proximity to the very dense areas of the Bronx makes these cities and shopping centers an attractive retail destination for consumers. These shopping centers offer convenient parking and a well curated mix of retailers. In general, retailers are looking for smaller, efficient spaces, in locations with visibility and parking convenience and are intensely focused on store productivity. Westchester Offices – Not yet a Noticeable Turnaround Westchester office supply demand deteriorated marginally during Q4, vacancy increased and price weakened. Overall, the office sector appears relatively stable, but it is not encouraging to see a couple of consecutive quarters where there were more departures than take-up of office space. Pricing deterioration was modest, most likely driven by mix. Large and notable office leases were recently signed by Heineken, which re-leased space in White Plains, and the Westchester Center for Human Development which leased a large block of space in Elmsford. H O U L I H A N L AW R E N C E CO M M E R C I A L | 8 0 0 W E S TC H E S T E R AV E . , S U I T E 5 1 7 N , RY E B R O O K , N Y 1 0 5 7 3
Executive Summary
FOURTH QUARTER 2025
Office usage trends are still undergoing deep transformation; employers are offering more amenities but less space per employee. Flexible spaces are an important element in office designs and customization needs to address the unique needs of the business, making commodity layouts more difficult to use (and lease) without a significant investment. Westchester Industrial – Scarcity Drives Price Gains Beginning with the second quarter of 2024 we have seen an uninterrupted gradual increase in industrial lease prices, despite supply demand imbalances that were not favorable. During Q4, leasing activity was brisk, supply-demand favorable and occupancy increased marginally. Prices continue to increase and compared to a year ago, lease rates have increased 9.5% in that period, according to data from Costar. Large industrial leases have recently been signed in Portchester (Masthead Surgical Bra), Peekskill (White Plains Linen) and Elmsford (Coastal Tile and Marble). New supply of industrial assets, typically located outside of Westchester County but serving the region, has now diminished further supporting supply-demand fundamentals within the region. Investment Sales – Average Size of Building Traded Increases The number of transactions during Q4 was half the prior quarter but the size of the buildings transacted larger. The median price paid per square foot was higher. These statistics indicate that larger buildings, in better condition, are beginning to trade and investors are willing to pay higher prices per square foot. Overall, capital sources are rediscovering real estate opportunities. The investment market is attracting liquidity as valuations settle and begin to recover. Debt providers are back lending, albeit with reduced allocations and maintaining a very conservative underwriting. As we look forward to 2026, we see transaction activity recovering and gradually ramping up over the year. A healthy economic backdrop is helpful, and savvy investors understand that with patience, they can identify assets, currently trading below replacement value, that represent a profitable investment. About this Commercial Real Estate Report This report was researched and written by Teresa Marziano. Please contact Teresa (914- 441-2254) or (TMarziano@ HoulihanLawrence.com) for questions, comments or feedback about the contents of this report.
HOULIHAN LAWRENCE COMMERCIAL TEAM
Commercial real estate is facing a challenging period as low-interest rate loans become due. Interesting commercial real estate investment opportunities will likely become available. Investors must be prepared to evaluate and make decisions expediently as opportunities emerge. Given the consumer and market changes brought about by the intense period of change we have experienced due to structurally higher inflation, higher financing costs, and most recently, policy changes, it is very important to correctly assess market and economic risks that add to the complexities of acquiring commercial real estate. Understanding the ever-changing market forces that are shaping the fundamentals for each property requires a deep knowledge of the property, local and regional insights, and close contacts with the right financial partners. Our Team is highly skilled in all these areas. Reach out to HOULIHAN LAWRENCE COMMERCIAL for a complementary assessment of your real estate, an evaluation of a purchase target, and to receive an in-depth perspective on the ever-changing Westchester commercial real estate market.
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Unemployment Rate in Westchester – Remains at a Low Level
Unemployment rate in Westchester appears rangebound as services industries in the area continue to grow and create opportunities. The local economy appears resilient, for the time being. Medical and personal services, logistics and transportation are among the fastest growing sectors.
Westchester County Unemployment Statistics - Not Seasonally Adjusted
9 8
PERCENT
7 6 5 4 3 2
Jan 2021
Jul 2021
Jan 2022
Jul 2022
Jan 2023
Jul 2023
Jan 2024
Jul 2024
Jan 2025
Jul 2025
YEAR
Sources: COSTAR, Trepp, US. Bureau of Labor Statistics, Unemployment Westchester County (Not Seasonally Adjusted) , NY. Real Estate Employees Data is Seasonally Adjusted. All data retrieved from FRED, Federal Reserve Bank of St. Louis; January 2026
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Multifamily Projects: Deliveries Subside. Affordability a Constraint to Rising Rents WESTCHESTER, SOUTH OF I-���
Multifamily deliveries have declined sharply, and the construction pipeline has decreased to the lowest point in several years. Asking rents have remained stable. Over time, lower new supply is supportive of fundamentals.
VACANCY IMPROVES AND RENTS FLAT WITH Q4 2024
Asking Rent Per Unit
Vacancy Percent
ASKING RENT PER UNIT
6%
$2,700
5%
$2,650
4% $2,600
3%
$2,550
2%
$2,500 $2,450
1%
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
U N D E R CO N S T R U C T I O N P I P E L I N E D EC I N E S S H A R P LY
Q4 2024
Q1 2025
Q2 2025
Q3 2025
Under Cosnstruction Units
Q4 2025
VACANCY PERCENT
7%
$2,750
0
Deliveries Units
8,000
1,400
7,000
1,200
6,000
1,000
5,000
800
4,000
600
3,000
400
2,000
200
1,000 0
DELIVERIES PERCENT
UNDER CONSTRUCTION PERCENT
1,600
0 Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Q1 2025
Q2 2025
Q3 2025
Q4 2025
Sources: COSTAR, Trepp, US Bureau of Labor Statistics, Data Reflects Fundamentals for Westchester County Area South of I-287. Price Index for Westchester retrieved from FRED, Federal Reserve Bank of St. Louis; January 2026
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Westchester Office and Retail – Office and Retail are Looking for Stability WESTCHESTER, SOUTH OF I-���
Office occupancy and pricing are relatively stable. Despite reports of employers demanding more time in the office, we have not seen a meaningful improvement in office fundamentals. Retail rental prices and occupancy are stabilizing. Overall focus on small and very productive spaces has increased.
Office Gross Rent Overall
$40 $35
12%
$30
10%
$25
8%
$20
6%
$15
4%
$10
2% 0
$5 0 Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
RETAIL ENJOYING RELATIVE STABILITY
Q1 2025
Q2 2025
Q3 2025
Vacancy Percentage total
Q4 2025
All service type rent overall $36
VACANCY PERCENTAGE
9%
$35
8% 7%
$34
6%
$33
5%
$32
4% 3%
$31
2%
$30
1% 0
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Q1 2025
Q2 2025
Q3 2025
Q4 2025
$29
ALL SERVICE TYPE RENT OVERALL
VACANCY PERCET TOTAL
14%
OFFICE GROSS RENT OVERALL
Vacancy Percentage total
OFFICE TRENDS NOT YET IMPROVING
Sources: COSTAR, Trepp, US Bureau of Labor Statistics, Data Reflects Fundamentals for Westchester County Area South of I-287. Price Index for Westchester retrieved from FRED, Federal Reserve Bank of St. Louis; January 2026
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Industrial Properties – Supply-Demand Constructive
SOUTH OF I-���
Industrial fundamentals are stabilizing after some tariff related disruptions. Price remains remarkably resilient.
Vacancy Percentage
All Service Type Rent Overall
$18.0 VACANCY PERCENTAGE
7%
$17.5
6%
$17.0
5%
$16.5
4%
$16.0 $15.5
3%
$15.0
2%
$14.5
1% 0
$14.0 Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Q1 2025
Q2 2025
Q3 2025
Q4 2025
$13.5
ALL SERVICE TYPE RENT OVERALL
INDUSTRIAL LEASE RATES IN WESTCHESTER CONTINUE TO RAISE
Sources: COSTAR, Trepp, US Bureau of Labor Statistics, Data Reflects Fundamentals for Westchester County Area South of I-287. Price Index for Westchester retrieved from FRED, Federal Reserve Bank of St. Louis; January 2026
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Investment Activity Remains Weak as Uncertainty still Weighs on Investors SOUTH OF I-���
Investment sale transactions declined in number, but median pricing rebounded. This suggests that better quality properties, have begun to trade. Liquidity is beginning to open for CRE and we enter 2026 with an improved financing landscape.
Sales Volume (in Thousands)
Median Price Per Building SF
$300
$450,000 $400,000
MEDIAN PRICE PER BLDG SF
SALES VOLUME IN THOUSANDS
MEDIAN PRICE RECOVERS BUT TRANSACTIONS SUBDUED
$250
$350,000 $200
$300,000 $250,000
$150
$200,000 $150,000
$100
$100,000 $50
$50,000 0
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Q1 2025
Q2 2025
Q3 2025
Q4 2025
0
Sources: COSTAR, Trepp, US Bureau of Labor Statistics, Data Reflects Fundamentals for Westchester County Area South of I-287. Price Index for Westchester retrieved from FRED, Federal Reserve Bank of St. Louis; January 2026
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