Fairfield office market off to fast start in '94

Real Estate Weekly, April 20, 1994

Strong leasing activity by small to mid-sized companies got the Fairfield County office market off to a fast start in 1994. According, to the Rostenberg-Doern Doern Quarterly Office Market Report, 414,841 square feet of Class A and B office space was absorbed in Fairfield County during the first three months of 1994. The Countywide vacancy rate for the first quarter was 2 1.4 percent, down from 22.6 percent at the end of 1993. There was no new office construction activity under way in the county during the first quarter, continuing a trend that began three years ago.

"Significant expansions within the market, as well as relocations from outside the county, continued to fuel a steady recovery in Fairfield County," said Gerard P. Hallock, senior vice president of Rostenberg-Doern Company, Inc.

Among the major transactions of the first quarter were the relocation of London Fog Corporation's headquarters from Maryland to 50,000 square feet of leased space in Darien; the relocation and expansion of Micro Warehouse Inc.'s headquarters to 55,500 square feet in Norwalk; the 20,000 square-foot expansion by Citizens Utilities in Stamford; and the sale of 1 Forest Parkway, a 78,600 square-foot building in Shelton, to U.S. Capital.

Rather than leasing office space, some companies are buying buildings at depressed prices and renovating them to fit their space requirements. "Instead of build-to-suit, we're seeing buy-to-suit," Hallock said.

In addition to the U.S. Capital acquisitions other notable sale transactions in the first quarter were the 55,000 square-foot Tetrapak building in Shelton to Greenwich Workshop, and American Technology's acquisition of Forschner's 27,000 square-foot building in Shelton.

The survey of Fairfield County's four office markets showed:

Fairfield County Central Business District: For the first time in recent memory, the vacancy rate in downtown Stamford dropped below 20 percent. The city's first quarter vacancy rate of 19.5 percent was down from 20.1 percent at the end of 1993 . Approximately 87,600 square feet of space was absorbed. The availability of large blocks of Class A space in the city is shrinking. Currently, there are only two Class A buildings with more than 100,000 square-feet of unfinished continuous space. MAJOR DEALS: ASI, Citizens Utilities, Computer Graphics Resources, H.J. Baker, Nation's Bank, 9 West Group, Penton Publishing, and Smith Barney Shearson.

Fairfield County East: The Shelton-Trumbull-Westport market led the county in absorption, with 205,217 square feet of space absorbed. The vacancy rate fell from 27.7 percent at year-end 1993 to 25.4 percent for the first quarter. MAJOR DEALS: American Technology, Greenwich Workshop, The Ryan Partnership, Spinergy, U.S. Capital and Weak Publishing.

Fairfield County West: Despite the addition of several large blocks of sublease space, the Greenwich-Norwalk market reported approximately 108,900 square feet of space absorbed in the first quarter. The first quarter vacancy rate of 18.7 percent declined from 19.8 percent 3 months ago. MAJOR DEALS: Bondnet, Finehost, London Fog Corporation, Micro Warehouse, Rogers Casey & Associates, Software Securities, TMG Financial Products and USGI.

Fairfield County North: The Danbury office market saw little improvement during the first three months of the year, as the vacancy rate fell slightly to 27.2 percent and absorption totaled just over 13,000 square feet. MAJOR DEALS: Diba Industries and MetLife.

The Rostenberg-Doern Quarterly Office Market Report is the most comprehensive report of its kind on the Fairfield County office market. More than 430 multi-tenant Class A and B buildings in Fairfield County were surveyed. Government owned and occupied buildings, owner occupied buildings, medical office buildings and buildings under 20,000 square feet were excluded.