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Modest Gains for Fairfield Office Market
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Business New Haven
10/27/2003
By: Michael C. Bingham
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Direct leasing continues to outpace subleasing, with 587,646 square feet directly leased during the third quarter and subleasing activity accounting for 155,873 feet, according to Cushman & Wakefield (C&W). Direct leasing decreased this quarter from 843,677 square feet in the second quarter.
Major transactions during the July-to-September period included Oxford Health Plan's 240,000-square-foot renewal at 48 Monroe Turnpike, Trumbull; Glencore's 45,537-square-foot renewal at Three Stamford Plaza in Stamford; and Pitney Bowes' 24,172-square-foot lease at 10 Middle Street, Bridgeport - the largest office lease transaction in Bridgeport in over a decade.
According to C&W, combined Class A and B overall vacancy in Fairfield County dropped from 20.7 percent at year-end 2002 and 20.3 percent in the second quarter to its current level of 20.0 percent. Direct vacancy rates decreased from 13.7 percent and 13.6 percent, respectively, to 13.5 percent in the same period.
For Class A space, the county-wide vacancy rate decreased slightly during the quarter from 17.5 to 17.3 percent, according to commercial broker Albert B. Ashforth Inc. As of September 30 5,877,217 feet of space was available, compared to 5,908,918 on June 30, according to Ashforth.
"There was very little change in vacancy levels from the second quarter of 2003," says Michael B. Gordon, director of business development for Cushman & Wakefield of Connecticut. "The most significant changes occurred in the Greenwich and south-central submarkets."
Healthier net absorption numbers for the quarter are another indication of the market's stability, according to C&W. Net absorption this quarter was a positive 120,603 square feet, compared to a negative 798,311 feet in the fourth quarter 2002 and positive 32,256 feet in the second quarter of 2003.
Added Gordon: "The outlook for the Fairfield County market in general, and the greater Danbury submarket in particular, is positive. There are a number of large tenants expected to conclude transactions in the fourth quarter."
Boehringer Ingelheim will expand its 294-acre headquarters campus in Ridgefield and Danbury with a $400 million to $500 million building project that will create 500 to 700 new jobs over the next six years.
On the other hand, as a result of its recent bankruptcy, Micro Warehouse may be vacating as much as 90,000 square feet of office space at 535 Connecticut Avenue in Norwalk.
Despite an increase in demand for office investment properties, sales activity is lower for the first three quarters of 2003 than for the same period of 2002. With sales up 7.5 percent nationally, this drop off in sales is attributable to the lack of office product available for sale in the county, according to C&W.
There were, however, two major sales transactions in Fairfield County this quarter: High Ridge Park Associates, LLC sold the 498,000-square-foot High Ridge Park in Stamford to George J. Comfort & Sons of New York for $85,552,581; and in an unusual UPREIT transaction, Boston-based 1055 Stamford Associates sold 1055 Washington Boulevard in Stamford to Reckson Associates for $21.6 million in cash and the issuance of 465,845 Class-C Common units of a limited partnership interest, valued at $24 per unit.
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