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Vacancy Rates Falling
Good news for realtors
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Business New Haven
10/28/2002
By: BNH
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New Haven commercial vacancy rates fell for the third straight quarter to 10.7 percent, with a positive net absorption of 21,969 square feet. Overall Class A vacancy rates in New Haven - central business district (CBD) and non-CBD combined - remained unchanged at 4.7 percent, signaling little to no positive or negative momentum, according to New Haven-based Traub & Co.
"We remain positive regarding downtown New Haven's ability to continually absorb space," explains Carl Traub, president of the commercial real-estate firm. "While other markets are struggling, New Haven has seen a relatively healthy rebound from the 2001-02 economic slowdown and we remain encouraged by the numbers."
Local market momentum in New Haven County continues, according to Traub's quarterly report, as demand increases and supply falls. The current overall vacancy rate in the CBD is now at 15.1 percent, with New Haven reporting a vacancy rate (CBD and non-CBD) of 10.7 percent across all classes of commercial property.
Most CBD activity is from expansions. In comparison, most office and industrial markets in Connecticut were showing modest signs of improvement at mid-year 2002.
The New Haven office market has an inventory of more than 4.2 million square feet. The CBD houses just over half of all space with 2.6 million square feet and 21 buildings with an average square footage of 125,000. The non-CBD, with 14 buildings, includes approximately 1.5 million square feet. Average building size in the non-CBD is 105,959 square feet.
Class A vacancy rates in the CBD fell slightly to 6.9 percent for the third quarter from seven percent in the second quarter. CBD vacancy rates in Class B buildings increased slightly, quarter over quarter, from 24.7 percent to 24.9 percent.
Vacancy rates in Class A non-CBD buildings remained unchanged at less than one percent and Class B non-CBD buildings reported an increase n vacancy from 3.8 percent in the second quarter to 5.9 percent in the third quarter.
Traub credits Science Park's ongoing renovation, Yale University's new $176 million 457,000-square-foot lab and research center, and Acorn Development's Class A 60,000-square-foot addition to Granite Square at One Audubon Street for having an overall positive effect on the New Haven market.
Construction at One Audubon is ahead of schedule for a fall 2003 opening, according to developer David Beckerman.
Fairfield County's Tale of Woes
Fairfield County's office market continued to struggle during the most recent quarter, as availability rates soared to 37 percent of the county's overall available space. Stamford's availability rose more than 6.5 percent to 18 percent.
Stamford's was ranked one of the worst five major commercial real estate markets in the country in a Moody's report released in early October. Denver topped Moody's worst markets list, followed by Austin, Tex., Portland, Ore., Stamford and Baltimore, Md.
New York based Moody's says the national vacancy rate is higher year-over-year (11.3 percent in second quarter 2001 rising to 15.7 percent in the second quarter of this year).
Stamford "warrants monitoring," according to Moody's.
Realtors with Insignia/ISG in Stamford blame the poor conditions on concerns about the recession and an unstable international climate prompting belt-tightening, according to a quarterly report it just released.
The value of commercial real estate did rise in Fairfield County, with demand in the western submarket (including Norwalk) of the county surpassing levels of the first nine months of the year. That submarket's available space has risen 24 percent from September 2001.
Though strong activity in the western submarket has driven the county's leasing thus far this year, more than 400,000 square feet of positive absorption was not enough to offset continuing space returns and weak leasing in the other three submarkets.
Fairfield County leasing activity fell 17 percent from the first nine months of 2001 to 2.2 million square feet, and average asking rent, reflecting the increase in the available supply, fell $2.43 per square-foot to $28.34
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