Fairfield sees most dramatic vacancy increase in 10 years

Real Estate Weekly, July 25, 2001

The Fairfield County office market encompasses a total office base of 43.7 million SF within its 627 square miles. CB Richard Ellis tracks 534 Class A and B office buildings containing 20,000 SF or more of net rentable area in Fairfield County.

The overall vacancy rate for the Fairfield County office market increased from 7 percent in the first quarter 2001 to 9.1 in the second quarter. Over the six-month period commencing at the start of 2001, the vacancy rate has increased from 6.6 percent in the fourth quarter 2000 to 9.1 percent in the second quarter 2001. This is the most dramatic increase in over ten years. The Class A vacancy rate increased this quarter, from 5.3 percent to 7.5 percent. The Class B vacancy rate also increased, from 10.5 to 12.6 percent this quarter.

The vacancy rate in the Lower Fairfield County submarket increased from 7.5 percent to 8.6 percent due in part to META Group and Westinghouse each consolidating space at Harbor Plaza in Stamford. The Central Fairfield submarket exhibited the largest increase, from 8 percent to 12.3 percent due to News Corporation leaving space at Merritt 7 in Norwalk. Upper Fairfield County and Eastern Fairfield County both increased from 8.4 percent to 11.9 percent and 4.6 percent to 5.9 percent, respectively. The availability rate for Fairfield County rose from 10 percent to 12.1 percent during this quarter.

The Fairfield County total net absorption for the second quarter 2001 was a negative 517,703 SF. Excluding a minor statistical aberration in the fourth quarter 1998, this quarter's negative net absorption figures are the highest in over ten years and the half year total of a negative 724,587 SF equates to the highest six-month negative net absorption since before 1990. Although the past two quarters have shown negative net absorptions, the market did see a total positive net absorption of 438,913 SF for the year 2000.

The average asking lease rate in Fairfield County's office market during the second quarter 2001 is $31.38 per SF, a decrease of $0.27 from $31.65 per square foot in the first quarter 2001. Lease rates in Fairfield County are slightly down this quarter due in part to several Class A buildings reducing rents.

The average asking lease rate in Lower Fairfield County submarket fell from $34.39 in the first quarter 2001 to $33.93 in the second quarter as a result of Greenwich Plaza reducing the direct lease rate from $72 to $69 this quarter.