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Real Estate
1998 offers a mixed message for commercial real estate market
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Business New Haven
2/22/1999
By: BNH
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According to year-end reports from four regional commercial real estate firms, corporate downsizings, expanded inventory and a strong leasing market paint an uneven picture of the year's activity. CB Richard Ellis, Cushman & Wakefield, Insignia/ESG and Witten & Nolletti, all reported significant new leasing and sales activity in the year.
The Insignia/ESG Commercial Market Report said that 807,000 square feet of space was leased in New Haven County but the return of large blocks in a redevelopment at 470 and 472 Wheelers Farm Road in Milford, and downsizings at Oxford Health Plans and Executone in Milford and General DataComm in Middlebury contributed to negative net absorption of 161,330 square feet.
According to Insignia that compares to 1997's positive absorption of 241,350 square feet for the County. New Haven County's availability rate at the end of 1998 was 21 percent, compared 20.7 percent at the end of 1997 and 21.7 percent in December 1996. Insignia cited ADT Security Services, APL Group, Barakos Landino Design, AST, Expocon Mangement, Gastreonterology Center of Connecticut and the Highville Mustard Seed Charter School as major leases outside New Haven's central business district.
CB Richard Ellis' Bottom Line Report portrayed a somewhat stronger picture of the the greater New Haven office market at year-end. The greater New Haven office market totaled 10.8 million square feet, with 1.9 million square feet of available supply and a net absorption of 569,992 square feet.
CB also cited significant transactions in New Haven's central business district during 1998, including leases at 157 Church Street, 900 Chapel Street, Priority Care Inc.'s 11,000-square-foot lease at One Church Street and Kirpatrick & Lockart's 5,600-square-foot lease at 265 Church Street.
Adding to a positive chorus for New Haven's CBD Insignia/ESG said New Haven's CBD accounted for 128,790 square feet of leased space absorbed in 1998, compared to 1997's negative absorption of 13,170 square feet.
Cushman & Wakefield cited a strong performance in the northern part of the greater New Haven market which could portend new real estate development. The northern market Class A vacancy rate was 10.8 percent, compared to 13.7 percent in 1997.
“Nothing is definitive, but we may see development if there is significant pre-leasing interest,” said Cushman & Wakefields's Bob Motley. “Developers are taking a hard look at this market. If they get a sense that pre-leasing levels can reach 60 to 75 percent, we believe new development will go forward.
According to Motley, Class A vacancies continue to tighten throughout New Haven, dropping to 14.8 from 16.3 percent. “The tightening of the market spurred the sales of such properties as Signature 91, the Woodbridge Corp. Park and Research Parkway. Tightening vacancy rates may jump-start Class B redevelopment” said Motley.
Multi-family investment apartment sales also showed gains in 1998. According to Steve Witten, president of Witten & Nolletti, “Property values continue to exhibit positive growth and the past year demonstrated the highest per-unit values that we have ever experienced other than a few misleading transactions in 1986.”
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