Economy: Labor Market Remains Resilient as Westchester Employment Grows
During the third quarter of 2026, U.S. nonfarm payrolls increased by approximately 473,000 positions year-over-year (YOY), while the national unemployment rate declined 20 basis points (bps) to 4.2% in September 2026. In Westchester County, employment increased by approximately 5,600 positions, or 1.1%, from Q3 2025, while the local unemployment rate rose approximately 20 bps to 3.7%. Overall, both labor markets demonstrated resilience through the third quarter of 2026, with Westchester County continuing to post employment growth despite a modest increase in unemployment.
Supply & Demand: Despite Softer Leasing, Overall Vacancy Tightens
Westchester County’s office market exhibited mixed fundamentals through the first three quarters of 2026, as occupancy gains were dampened by weaker leasing volume and sluggish quarterly absorption. Year-to-date (YTD) new leasing activity totaled 573,515 square feet (sf) through Q3 2026, down 26.4% YOY and 18.5% below the five-year YTD average of 704,087 sf. Leasing slowed markedly in the third quarter, with 173,777 sf transacted—down 36.5% YOY and 30.0% quarter-over-quarter (QOQ). Demand remained anchored in the county’s core, led by the White Plains CBD at 238,402 sf of YTD transactional volume—down 16.3% YOY but 30.6% above its five-year average. Likewise, the West I-287 corridor held largely steady at 125,288 sf, a 0.7% YOY decline, while East I-287 totaled 159,462 sf, down 32.3% YOY. Despite the pullback in leasing, the overall vacancy rate improved to 24.0%, down 61 bps YOY, though up 86 bps QOQ. Direct vacancy tightened 66 bps YOY to 22.8%, reflecting underlying gains across the market. At the submarket level, East I-287 posted a 210-bp YOY improvement to 23.3%, while West I-287 fell 100 bps YOY to 26.0%.
Net absorption softened considerably, with the county posting negative 194,902 sf in Q3 2026, a sharp reversal from the 167,391 sf of positive absorption recorded in the prior-year quarter. This brought YTD absorption to 55,740 sf, well behind the 423,741 sf recorded a year ago, though still ahead of the negative 67,043 sf five-year YTD average. East I-287 was the primary driver, contributing 165,413 sf of YTD occupancy growth, while the White Plains CBD added a further 30,748 sf. This strength was tempered by West I-287, which posted negative 36,371 sf YTD, and Southern Westchester, where net move-outs weighed on the quarter.
Pricing: Overall Average Asking Rents Hold Firm
Countywide overall average asking rents reached $30.63 per square foot (psf) in Q3 2026, nearly flat YOY—up 0.45% QOQ, and holding 0.8% above the five-year average of $30.40 psf. Class A asking rents averaged $31.26 psf, down marginally YOY but higher than in Q2 2026. The White Plains CBD continued to command the highest rents in the County at $34.44 psf, though down 4.5% YOY, while Northern Westchester posted the strongest growth, climbing 2.8% YOY to $32.14 psf.
