Availability declines in Fairfield, grows in Westchester

Real Estate Weekly, Jan 26, 1994

Major corporate relocations, expansions by area companies and a probusiness development effort by the State of Connecticut helped energize the Fairfield County office market in 1993.

According to the Rostenberg-Doern Corporate Real Estate Report released this month, approximately 1.1 million square feet of space was absorbed county-wide, more than double the absorption in 1992 and the largest gain since 1988. The county-wide vacancy rate was 22.6 percent, down from 24.8 percent in 19926.

Fairfield County leasing activity, which includes relocations within and into the county, renewals and expansions, totaled an estimated 2 million square feet in 1993. For the third consecutive year there was no new office construction underway in the county.

"Connecticut is doing an excellent job of aggressively pursuing companies looking to relocate to the state as well as helping companies that wish to remain here. This state effort, which has been regionally assisted by SACIA and the Fairfield County Information Exchange, has greatly benefitted Fairfield County's economy in 1993," said John H. Rostenberg, Principal of Rostenberg-Doern Company, Inc. Witco Corporation's relocation from New York City to 250,000 square feet of space in Greenwich, a move sparked by attractive financial incentives from the state, was the largest lease transaction in the region. Other notable newcomers to the county in 1993 included Dun & Bradstreet, Walter Karl Company and A.C. Nielsen.

There was internal growth in the market as well. Oxford Health Plans moved from Darien to 160,000 square feet of space in Norwalk, an expansion of 110,000 square feet Other companies expanding in Fairfield County in 1993 included Prudential Mortgage, D.L. Ryan and Shelton Scientific.

Downtown Stamford, which only a few years ago had one of the highest vacancy rates in the nation, saw its rate fall to about 20 percent in 1993.

"Thanks to several years of strong leasing activity, the inventory of high quality space in downtown Stamford is dwindling. Consequently there was been a noticeable firming of rents and concessions," Rostenberg said.

Across the border in neighboring Westchester County, where corporate downsizing continues, more space was vacated than leased in 1993, leaving Westchester with a negative absorption of 1.2 million square feet and a vacancy nearly 27 percent.

As a result, the combined Fairfield-Westchester Region ended the year with a negative absorption of 121,201 square feet and a vacancy rate of 24.4 percent, up slightly from 24 percent at the end of 1992.

There are some areas of concern for Fairfield County. Xerox and U.S. Surgical, both major employers in the county, have recently announced a round of layoffs for their operations. And the recent cutbacks by SNET are also a troublesome sign for the county's office market.

"Fortunately a new generation of smaller companies in fast-growing industries such as health care, telecommunications and financial services is rebuilding the county's job base. More importantly, the state has recognized the value of an aggressive economic development program in helping to reestablish Fairfield County as one of the nation's leading business communities," Rostenberg said.

The survey of Fairfield County s four market areas showed:

Fairfield County Central Business District: With a vacancy rate at 20 percent and an annual absorption of approximately 270,000 square feet of space, the downtown Stamford office market enjoyed an excellent year in 1993. The sublet market, which has hindered this market for several years, is becoming less of a factor, About 15 percent of the market is sublet space, down from about 20 percent in 1992.

With no significant downsizings now known, 1994 could be another year of solid growth for Stamford. MAJOR DEALS: Norelco, Perkins Goodwin, Price Waterhouse, Reuters, Service America, Soundview Financial Thompson Publishing and U.S. West.

Fairfield County East: Although it has the highest vacancy rate in the county, the Shelton-Trumbull office market showed improvement over 1992. Absorption totaled more than 362,000 square feet, up from about 200,000 square feet in 1992. The vacancy rate fell from 28.5 percent in 1992 to 27.7 percent. MAJOR DEALS: D.L. Ryan, Dun & Bradstreet, Forschner, GE Supply, Information Management Associates, Lincoln National Life, Nash Engineering, NASDAQ, Newfield Publications, Prudential Mortgage, Sikorsky Federal Credit and Starwood Capital.

Fairfield County West: Corporate relocations from New York and major expansion by area companies combined to give the Greenwich-Norwalk market a dramatic rebound from 1992. Approximately 592,000 square feet of space was absorbed, up from only 83,575 square feet in 1992. The vacancy rate for this market fell from 26.6 percent to 19.8 percent. Witco's move from New York City to 250,000 square feet in Greenwich was the largest transaction in the region in 1993. In an expansion move, Oxford Health Plans leased 160,000 square fee in Norwalk. MAJOR DEALS: A.C. Nielsen, A.T. Clayton, Bankers Trust, Caldor, Greenwich Medical Group, IDS American Express, Long Term Capital, Oxford Health Plans, Premier Relocation, Wacker Chemical, Walter Rarl Company, Weeden Co., Witco Corporation.