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Report: Fairfield Office Market on Upswing
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Business New Haven
2/16/2004
By: BNH
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STAMFORD - Cushman & Wakefield (C&W) has released year-end 2003 statistics for the Fairfield County office market that show marked signs of improvement, bringing with it optimism for additional gains in 2004.
"The leading indicator of an improving real estate market is
job creation," said Jim Fagan, senior managing director and head of C&W's Fairfield and Westchester County region. "Companies in 2001 and 2002 were focused on cutting costs. Today, business managers across the board are being asked to grow their businesses."
The overall vacancy rate in Fairfield County decreased by more than two percent to 18.5 percent, down from 20.7 percent at the end of 2002. The direct vacancy rate also dropped from 13.7 percent at year-end 2002 to the current 12.7 percent.
A substantial proportion of space leased in 2003 was sublease space, as many sub-landlords grew more aggressive with pricing and concessions in order to compete against the direct space available in the market.
"Generally, it seems that companies throughout the county have more confidence in the economy and are cautiously optimistic about the future," said Fagan. "This new assurance has motivated them to take advantage of the favorable market conditions and commit to longer lease terms and additional space."
Although leasing activity during 2003 increased from 2,241,890 square feet (s/f) in 2002 to 3,121,829 s/f, most of the activity occurred in three sub-markets: Greenwich, with 439,895 s/f; south central, with 1,075,208 s/f; and the greater Danbury sub-market, with 310,217 s/f.
Vacancy levels in these sub-markets decreased dramatically this year, as well. The overall vacancy rate in Greenwich decreased from 15.6 percent last year to 11.6 percent. In the south-central market, it decreased from 29.4 percent at year-end 2002 to 19.2 percent; and in greater Danbury, the overall vacancy level dropped from 30.6 to 24.7 percent.
Major lease transactions this year included Factset's 129,000-s/f lease at 601 Merritt 7 in Norwalk; Tauck Tours for 42,700 s/f and Katherine Gibbs School for 64,545 s/f, both at NordenPark in Norwalk; Ziff Brothers Investments, which relocated from New York City to lease 61,177 s/f at 55 Railroad Avenue in Greenwich; Oxford Health Plan's 240,000-s/f renewal at 48 Monroe Turnpike in Trumbull; and Boehringer Ingelheim's 229,000-sf lease at 39 Old Ridgebury Road in Danbury.
The Fairfield County investment sales market began slowly in 2003, as investors showed concern about the economy and leasing fundamentals. Activity in the second half of the year, however, picked up, although it never reached 2002 levels, primarily due to a lack of supply.
Major sales this year include Field Point Road Associates' sale of the 30,000-s/f 80 Field Point Road in Greenwich to Mannheim Field Point LLC for $19.8 million, or a record-breaking $660 psf; High Ridge Park Associate's sale of the 498,000-s/f High Ridge Park in Stamford to George J. Comfort & Sons of New York City for $85.5 million; and in an unusual UPREIT transaction, Boston-based 1055 Stamford Associates' sale of 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.
There is a trend developing in Stamford, where sites planned for office development are being reconfigured for other uses. Currently, five new retail projects (four in Stamford) and one new hotel are planned in the county. A 195,000-s/f Target store is under construction on the corner of Washington Boulevard and Broad Street in Stamford, with approvals in place for another 120,000-s/f Target on Hawley Lane in Trumbull.
Also in Stamford, a Burlington Coat Factory is under construction on the corner of Summer and Broad streets, Grade-A and Super Stop 'n Shop supermarkets are planned for West Main Street and a Courtyard by Marriott is being built on the corner of Summer and Broad Streets.
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