|
|
|
Market Watch
Events of 2001 affect New Haven County office Market
|
Business New Haven
4/15/2002
By: Anne-Marie Brungard
|
The affects in 2001 of the economy in recession and the aftermath of the September 11th attacks. Leasing slowed, absorption turned negative and availability increased, according to a report issued by Insignia/ESG.
In contrast to 2000's record performance, New Haven's office market saw a significant turnaround in 2001. Corporate hesitation in signing new leases drove leasing down by 49% from last year while the return of large amounts of sublease space to the market caused negative absorption. Dean J. Shapiro, executive director of Insignia/ESG's Westchester-New Haven operation said the mixed results are “a strong indication that while the unusual surge of activities is over, New Haven's stable corporate base provides the county an anchor on which to depend even in slower times.”
Insignia/ESG's report indicates that companies did two things in an attempt to control costs during the troubled economic environment after the events of September 11th: many companies made surplus space available for sublease and put a hold on expansions or relocations. As a result, demand dropped significantly during the year. The slowdown in leasing was widespread throughout the county with the CBD experiencing the greatest decline - 53% from last December.
Pharmaceutical, biotech and science related companies played a role in the stability of the CBD in 2001. At least five transactions took place with one of these companies. This type of activity will help the city emerge from an “elementary office and mixed-use market to a more diverse, even bioscience-learning corridor.” The suburban submarket struggled in 2001as economically-driven space returns caused 27,020 square feet of negative absorption. Despite the negative absorption and slow leasing in the region, the level of activity generated in the area was enough to keep availability at one of the lowest levels in the segment's recent history.
Fairfield County office market struggles in 2001 but is still resilient
According to a report issued by Insignia/ESG, despite lower demand, higher availability and negative absorption, Fairfield County's office market finished 2001 with statistics far more favorable than those of the last major economic downturn. In comparison to the mid-90's, 2001's numbers look definitely less discouraging.
Shapiro emphasized that “…as soon as the national economy begins to recover from all signs this has already started to happen, things will pick up remarkably quickly.” Leasing activity fell off by 40 percent to 3.1 million square feet, one of its lowest levels, since the number of tenants shopping for space dropped dramatically. Corporate downsizing, business failures and growth of sublease space led to negative absorption totaling nearly 2.6 million square feet. By comparison, at the same time last year Fairfield had seen over 1.5 million square feet of positive absorption. The average asking rent remained at high levels, growing by 14 cents per square foot to $29.50 per square foot.
Expansion of local companies has always been one of the driving factors of the Fairfield County office market. As anticipated, Fairfield County companies halted expansion plans for 2001 in large numbers. Total expansions dropped by 30 percent compared to 2000, to 1.2 million square feet. New ventures, an indicator of economic strength, plummeted 93 percent to 23,880 square feet. Relocations from outside of the region grew by 13 percent, due largely to two world Trade Center companies.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
