Economy drives new wave of spec construction

Real Estate Weekly, June 3, 1998 by Mark R. Costello

A few of the major developments that are ready to break ground include The Reservoir Corporate Centre, a 400,000 square-foot Class A office complex in Shelton; Briar Ridge Road, a 200,000 square-foot, two-building office complex in Danbury; Mill River Corporate Park, a 250,000 square-foot office complex in Stamford; Havemeyer Office Park in Stamford, consisting of the renovation of the 125,000 square-foot former Dorr-Oliver headquarters and construction of a 150,000 square-foot addition; 4 Corporate Drive in Shelton, to offer two office buildings totaling 250,000 square feet; and 10 Westport Road in Wilton, to consist of two buildings totaling 315,000 square feet.

While the relocation or expansion of the large Fortune 500 companies make the headlines, the small to mid-sized tenants are continuing to drive significant demand. For example, in April, the CB Richard Ellis' Stamford office represented Franchise Mortgage Acceptance Corp (FMAC) in yet another relocation for the company, where it took 22,000 square feet at One American Lane in Greenwich, and since then has taken an additional 4,000 square feet.

In a move from two locations in Westport, CB Richard Ellis recently assisted in the consolidation and relocation of TN Technologies to 230 East Avenue. The division of True North Technologies will occupy 54,000 square feet at this former Norwalk outlet center.

The continued shortage of space in Lower and Central Fairfield County, mainly Stamford, Greenwich and Norwalk, has resulted in tenants spilling over into Eastern Fairfield County, heading for towns like Bridgeport, Shelton, and Trumbull. In fact, many are saying that Bridgeport, a town often overlooked in the past, is on the "eve of a rebirth." If conditions remain constant and tenants are provided with incentives, it may happen sooner than many anticipate.

In Westchester County, available locations for tenants who have limited opportunities in either Manhattan or Connecticut include the former 600,000 square-foot Kraft Foods headquarters, which was recently purchased by New York developer Cohen Brothers Realty; a 320,000 square-foot former IBM facility on Mamaroneck Avenue; and the 340,000 square-foot space occupied by Prodigy at 445 Hamilton Avenue.

Signs of improvement are being driven by an expansion in health and business services, which is replacing jobs lost from years of downsizing at companies such as Prodigy, IBM, AT&T and NYNEX. Examples from 1998 include CB Richard Ellis' representation of Allstate Insurance in a 31,143 square-foot lease at 400 Rella Boulevard in Montebello and a 25,577 square-foot lease at 3020 Westchester Avenue in Harrison; Blue Cross Blue Shield in a 4,800 square-foot lease at 115 Stevens Avenue in Valhalla; and GNA Life Insurance Company in a 6,891 square-foot lease at 2 Manhattanville Road in Purchase.

In addition, major corporate relocations continue to have a positive impact on the Westchester County market, including the decision by Nine West to relocate its headquarters from Stamford to White Plains, and IBM retaining its former 420,000 square-foot headquarters site for use as a credit operations center These two decisions offset the consolidation of Prodigy into 82,356 square feet of office space at Westchester One in White Plains.

Tenants in the tri-state area, especially those looking for large blocks of space, will find that there are still viable opportunities. Going by the current activity witnessed by our offices, the outlook for both Fairfield and Westchester counties remains positive.