O.K.—and then what?

Any decision about the plant’s future has to be based on facts, not ideology or politics. And if Mr. Cuomo decides, after careful review of the facts, to make good on his promise to close the plant, he had better have a realistic, practical and environmentally friendly alternative. If he doesn’t, well, he’ll be putting politics and pandering ahead of the power needs of millions of households and businesses.

A recent report on the city’s power grid warned of severe shortages if Indian Point and its daily output of 2,000 megawatts go off-line. In the past, Mr. Cuomo has expressed confidence that replacing Indian Point’s output will not be hard. “There’s no doubt that we can find” alternative generation, the governor said a year ago.

Well, the clock is ticking on one of Indian Point’s licenses, and if there is an alternative plan under consideration, it is remarkably well-hidden. Mr. Cuomo will have to forgive New Yorkers who don’t share his belief that replacing Indian Point will be so easy.

If the plant’s operator is not granted a new 20-year license in 2013—which, by the way, starts in a matter of months—half of Indian Point’s generating power will disappear.

Once again, a simple question: And then what?

The plan to hit up drivers for 14 bucks when they enter Westchester County (the bridge has a one-way toll system) is very likely a trial balloon, similar to the Port Authority’s plan last year to impose huge new hikes on its bridges and tunnels that connect New York and New Jersey. Governors Cuomo and Christie expressed horror and outrage, and the PA, as if on cue, immediately reduced its request, but tolls went up all the same.

That’s the likely scenario for the new Tappan Zee Bridge—the toll will be significantly higher than it is now, but it won’t be as high as the request. That’s how politics works. But here’s the problem: Government is making it increasingly expensive for commuters and commercial traffic, and that’s simply not good news for the city and regional economy.

Visitors from other parts of the country are invariably shocked when they find they have to fork over double-digit tolls for the privilege of using a bridge or a tunnel. Then again, if they find that fee shocking, they undoubtedly fall into a dead faint when they receive their first parking ticket. Welcome to New York.

It’s expensive here, but it’s incumbent on government—especially on quasi-public agencies like the Port Authority—to keep the cost of transportation reasonable. Agencies like the Port Authority and the Metropolitan Transportation Authority often act in an less-than-transparent manner, and the PA has strayed far from its core mission of providing efficient transportation facilities for the New York-New Jersey region.

If the region’s transportation agencies are more concerned with building real estate empires or serving as patronage dumping grounds, they do a huge disservice to the region’s commuters and, therefore, to the regional economy. Like it or not, New York City’s vitality depends on the willingness of millions of New Jersey, Connecticut and Long Island residents to make the often-tiresome commute into and out of Manhattan every day. Some Manhattanites sneeringly refer to commuters as the bridge-and-tunnel crowd, as if they are a lower form of life.

But if a significant portion of the region’s commuters decided that they were tired of being seen as a cash cow for unaccountable public transportation agencies, the sidewalks of New York would look very empty indeed, and the economies of New Jersey, Connecticut and Long Island would benefit as a result.

New York’s elected officials may deny it, but they have plenty of power over the region’s transportation agencies. Their appointees are on the agencies’ boards, after all. They have to stop playing games and get serious about keeping the cost of commuting affordable. The city’s economy depends on those out-of-towners.

But besides distancing itself from an aging brand name, there was another reason behind the repositioning.

“Everything in the economy is shrinking, so we just shrunk our name,” joked Dr. Simeon Schwartz, the company’s founding president.

171 Huguenot Avenue.

Last month, WestMed signed a 15-year lease to transform a 28,000-square-foot space at 171 Huguenot Avenue in New Rochelle into a state-of-the-art medical multiuse health care facility. The renovations are expected to be completed by the middle of 2012.

“They have been in a position to expand their service reach,” said Frank Tomasulo, a senior vice president at CBRE who represented WestMed in the deal. “I can’t point to one entity that has taken on more new locations with the amount of square footage than they have over the last few years.”

Budd Wisenberg and William Cuddy Jr., both of CBRE, represented landlord Silwis LLC in the transaction.

Previously, the building served as the headquarters of the international shoemaker Bally North America, which housed a showroom, executive offices and retail space there.

Bally vacated the building in 2003, around the same time the asset was purchased by Siliwis, which then moved Bel-Aqua Pool Supply, a wholesale business the company owns, into a 100,000-square-foot warehouse at the base of the building.

The new space will eventually become a “polyclinic,” which, Dr. Schwartz explained, will offer patients a one-stop medical location for primary, specialty and urgent care. The aim of these polyclinics, he said, is to provide low-cost care in a more convenient setting.

Before it announced its latest clinic last month, WestMed also unveiled a new 84,000-square-foot polyclinic space at Westchester’s Ridge Hill development in Yonkers.

The Yonkers polyclinic is on the second floor of the so-called lifestyle complex, situated in the sprawling, 1.3-million-square-foot development owned by Forest City Ratner Companies. WestMed’s latest site in New Rochelle will provide the region “a facility they don’t have, which I think is going to be extremely popular,” said Dr. Schwartz.

Despite WestMed’s trajectory, however, there is a caveat to the medical group’s story. Even while expanding its so-called polyclinics, the group is in the throes of consolidating much of its medical space outside of Westchester, including a Bronx-based pediatric practice, which is slated to relocate to New Rochelle.

An estimated 30,000 square feet of space will eventually be disposed of in a strategy that targets smaller offices in favor of larger polyclinics. After the company unveiled its plan to move into Westchester’s Ridge Hill, Dr. Schwartz acknowledged in a Real Estate Weekly article that a new Yonkers space would serve as the new home for two medical outposts now operating at 1915 Central Park Avenue and 1254 Park Avenue in Yonkers.

WestMed operates throughout Westchester County and the nearby region, including in White Plains, Purchase, Bronxville and Throgs Neck—and has been expanding at a rapid clip.

In 2010, WestMed opened the Rye Ambulatory Surgery Center, a 14,490-square-foot clinic, on the company’s campus at 1 Theall Road.

When searching for a new location in New Rochelle, WestMed wanted an office space—up to 30,000 square feet—that would make its new polyclinic easily accessible to the company’s growing patient/customer base.
“One of the key elements was to have the proper amount of parking,” said Mr. Tomasulo.

Just blocks from 171 Huguenot is New Roc City, a 1.2-million-square-foot shopping center in New Rochelle’s downtown neighborhood. Also near is a bus route for Westchester’s Bee-Line bus service and the New Rochelle train stop on the Metro-North line.

For landlord Silwis, the challenging job market translated into a challenging office market for the company, said Mr. Wiesenberg.

The space itself was a “fairly large floor plate” that drew interest from other medical companies and from retailers, he added.

With the limited demand in Westchester from traditional service businesses like law firms and financial services firms, attracting a privately owned medical services tenant is ideal to any landlord.

“One of the shining stars has been the growth of the medical practices and the adaptive reuse of former office space into medical space,” added Mr. Wiesenberg.

Other multispecialty medical groups like Mount Kisco Medical Group and Scarsdale Medical Group have increased their presence in the county as budgets and layoffs rise for traditional hospitals like Westchester Medical Center, which is why a private medical client is an attractive one in the county.

“The market is absorbing space at a much lower rate,” said Mr. Tomasulo. “The landlords are clearly realizing this and have known for over the last couple of years that the number of potential users in the market has diminished."

WestMed will be renovating its new site at 171 Huguenot at a cost of $4 million, said Dr. Schwartz. “The space has been gutted to the beams."
drosen@observer.com

In other words, life on the outside remains precarious, something to watch.

"The overall market is starting to see real activity. It's starting to see more and more people looking at space," said Cory Gubner, president and CEO of RHYS, a commercial real estate services firm in Stamford, Conn. "That's a big change from three to six months ago. We always say when there's smoke, there's fire. There's a lot of smoke right now."

Long Island

"In Long Island, vacancies have been stable since the beginning of 2009; rents have only fallen 5.5 percent from the peak," said Aaron Jodka, senior real estate economist at research giant CoStar Group. "The availability rate has also stabilized. That has to do with an overall stronger economy. It didn't fall as hard."

Long Island has a strong presence of education and health care companies, which have weathered the downturn better than industries that are more dependent on the stock market. These "slow-and-steady" tenants have led to a more stable leasing market, said Mr. Jodka.

Major leases in the first quarter of 2010 included JPMorgan Chase's 15,199-square-foot lease at Atria West in Nassau County and Hub Insurance's deal for 7,015 square feet at 1393 Veterans Memorial Highway in Suffolk County.

The vacancy rate is just under 10 percent in Suffolk and Nassau counties, among the lowest in the tristate region. Asking rents are generally more expensive than in New Jersey, but less than in Westchester and Fairfield counties.

And in perhaps a sign of the region's viability, Jones Lang LaSalle opened a new office in Melville, in Nassau County, at the end of February.

New Jersey

Northern New Jersey, particularly along the Hudson River, has long been known as Manhattan's back office. The area's access to public transportation, including the PATH train and Amtrak, have been an asset, and tax incentives led to an office boom in the 1990s.

But now, the nearly 93 million square feet of Class A and B office space throughout Northern Jersey have a vacancy rate of over 22 percent, due to a lack of jobs, according to Paul Giannone, managing director at Jones Lang LaSalle. The state's major industries include pharmaceutical, telecommunications and financial services companies, none of which have been hiring extensively since the downturn.

New Jersey as a whole has long teetered as California East, and that should continue through 2010.

The state's northern part has a 13.5 percent vacancy rate overall, according to CoStar. And while that number has stabilized, the availability rate is increasing.

"It's a very weak climate for office space," Mr. Giannone said. "It will be a tenant's market for the foreseeable future."

Activity has increased, but 80 percent of deals that Mr. Giannone has seen are lease renewals, often with tenants consolidating space and moving into spaces that are 10 to 20 percent smaller than existing buildings. Cheaper rents, averaging about $24 per square foot, have allowed some tenants to "trade up" to Class A space, but these rates are not enough to support significant new development, which has stalled in this decade. Seventy-five percent of the office buildings in northern New Jersey are 15 to 20 years old, but developers and investors have renovated older office buildings to attract new tenants.

One exception is 111 Wood Avenue, a 250,000-square-foot new development in the Metropark office complex in Iselin. The developers broke ground on the project at the start of the downturn, but decided to continue building. There has been some interest in the building, but no leases completed, said Mr. Giannone, who is involved in the project. It is expected to be completed in September.

By then, the market probably still won't have fully recovered, but any progress is highly dependent on job creation. Godspeed, Governor Christie.

Westchester

The vacancy rate in Westchester rose to 17.6 percent at the end of the first quarter, up from 15.9 percent in the fourth quarter of 2009, according to Cushman & Wakefield. Part of this change was the availability of more than 80,000 square feet at 113 King Street in Armonk. The property is being marketed as a corporate headquarters building by Cushman & Wakefield.

Leasing activity is definitely up. Major deals in the fourth quarter included Allen System Corp.'s leasing 26,394 square feet at 287 Bowman Avenue in Port Chester and Avon Products' leasing 21,670 square feet at 44 South Broadway in White Plains.

Westchester is comparable to its neighbor, Fairfield, in terms of unemployment, with 5.7 percent fewer jobs compared to the peak. Rents are slightly lower overall.

The county is home to many law firms and diverse professional services, which aren't as vulnerable to stock market swings. "They can be more resilient, depending on business models," said Mr. Jodka of CoStar.

"We've done a couple hundred thousand square feet of deals in the last four months," said Jeff Newman, an executive vice president at Malkin Properties. "I think companies with expiring leases are seeing this is the last opportunity to lock in value."

Malkin Properties has seen the law firm Eckert Seamans expand twice at 10 Bank Street in White Plains, and Fifth Street Capital and Pearson Education have also recently signed leases. The building is near the Metro North train station, and again, convenient access to transit-particularly into New York City-is a major asset to outer-market properties.

Fairfield

The office market in Fairfield County centers on Stamford, a nexus of financial services and home to the headquarters of the Royal Bank of Scotland, as well as to the capital markets division of UBS AG. It was hard hit by the recession, and the leasing market is still the weakest compared to nearby areas, with a vacancy rate of 26 percent, said Mr. Jodka of CoStar.

But there are signs of life, with a "surge" in leasing in the last two quarters that included tenants outside of the financial industry. Nestle Waters moved from Greenwich to 165,000 square feet at 900 Long Ridge Road in Stamford. Priceline.com also took 69,822 square feet at 800 Connecticut Avenue in Norwalk, and Knight Capital subleased 66,485 feet at 33 Benedict Place in Greenwich, according to Cushman & Wakefield.

Another major lease came last week at High Ridge Park in Stamford, with computer security companies Protegrity Corporation and McAfee signing leases there. But 148,000 square feet are still vacant. The on-site amenities, including a cafe, reasonable operating costs and proximity to affordable housing in nearby towns were all cited as reasons for the lease.

"A suburban location like High Ridge Park is attractive to someone who's commuting from Danbury, Trumbull or Shelton," said Steve Baker, a senior director at Cushman & Wakefield, the broker for the property.

Activity has even spilled over to the construction industry.

"Two thousand ten has been a nice rebound," said Thomas Durels, CEO of Malkin Construction. "We're seeing a very nice pickup. We have some projects that were diverted in 2009, and are moving forward in 2010; 2009 was an anomaly. My expectation is that 2010 reflects a more sustainable level of activity." The company has two schools under construction, along with a multifamily unit called Metro Green in the south end of Stamford.

In the same area is Harbor Point, a major new development that will include two office towers totaling around 500,000 square feet and apartment units, with three residential buildings slated to open next month. But developer Building and Land Technology has yet to secure any commercial tenants, and the two office towers' fate is uncertain. (The company did not respond to requests for comment.)

BY ALL APPEARANCES, the outer office leasing market has escaped the abyss in 2010. But for those looking for peak levels anytime soon, don't hold your breath.

"I don't know what normal is anymore," said Mr. Gubner of RHYS. "The market has been so weird. Two thousand seven couldn't be normal; 2009 can't be normal because it was horrible. I think we've hit bottom and started the upturn."

rli@observer.com