Fairfield sees strong relocation activity.

In the past three years, Fairfield County has experienced strong relocation activity and has become a business center for many financial service firms, both large and small. The most notable of these relocations came at the end of last year when Swiss Bank announced plans to move approximately 1,200 employees from its current headquarters in Manhattan to Connecticut by late 1997.

In April, Swiss Bank signed a land disposition agreement with the city of Stamford for a 12-acre development site on which the bank intends to open its new US corporate headquarters. The signing of this agreement laid to rest any reports that the bank's plan to build a one million square-foot facility in Stamford was in trouble.

If the Swiss Bank project is completed according to current plans, it will contain a total of 1.4 million square feet in three separate office towers with a low-rise central building to house the trading functions and other areas.

In addition to strong relocation activity, Fairfield County has also benefitted from a continued decline in vacancy. At 17.6 percent, the overall vacancy rate is currently at its lowest level since the first quarter of 1987. This decrease is primarily the result of a lack of new speculative construction coupled with continued healthy leasing activity.

The most significant deal year-to-date, in not only Fairfield County but the entire New York area, was the signing of 157,217 square feet at 501 Merritt 7 Corporate Park in Norwalk. The lease was signed by Olin Corporation, a $2.7 billion Fortune 500 company which specializes in chemicals, metals and defense. The deal also reflects Fairfield County's ability to not only attract but accommodate and retain its tenant base. This transaction had a negligible impact on absorption, however, because most of the space taken by Olin was "phantom space," or space that was not actively marketed as available.

The Economy

The services sector, which has experienced job losses for the first time since the recession, is expected to account for over 60 percent of all new jobs by the year 2000. These jobs will be in the business, health and social services industries. Fairfield County's services industries employ a higher percentage of professional, technical and skilled service workers than most other counties. The growing service industries will need health and human service workers to serve our aging population, business and data processing workers to maintain technological processes, and semi-skilled workers to run the new "gaming" industry.

The finance and insurance sector, which was severely affected by bank closures, consolidations and restructurings, promises to be a growth sector through the end of the decade. While the banking industry is expected to continue its mergers and conversion to automation, the investment and credit sector will dominate the growth in Fairfield County. The construction industry, which lost close to half of its employment between 1989 and 1993, has started on the road to recovery during the first half of 1995, and is expected to experience growth of over 20 percent by the end of the decade.

Investment Climate

Confidence in the viability of the Fairfield County office market was evident during the first half of 1995, as several companies purchased property. Hyperion Software purchased and fully occupied a 142,000 square-foot building at 900 Long Ridge Road in Stamford. The facility was sold by Asea Brown Boveri (ABB) for $11.4 million, or $80.28 per square foot. Another noteworthy transaction was Cooperative Educational Services' user purchase of 25 Oakview Drive in Trumbull from AETNA for $2.2 million, or $26.51 per square foot.

The largest investor sale during the first six months of the year happened in February when the 1010 Washington Boulevard building finally closed. The facility was sold by 1010 Washington Boulevard Holdings, Inc., for $6.275 million, or $46.75 per square foot, to Olympus, Stamford, RVCA Partnership.

While internal retention and expansion of business is critical, there is a need to continue to ensure the area's attractiveness to outside firms. This has been the case, as Fairfield County continues to be an excellent location and investment option for companies with strong confidence in the region's future and marketability.

Although the beginning of 1995 was somewhat lackluster in comparison to the blockbuster year that Fairfield County experienced in 1994 in terms of demand, there were many signs during the second quarter that indicate that the County's office market has begun to regain some of last year's momentum. In addition to a continued decline in vacancy, sustained positive absorption in many submarkets has resulted in an upward pressure on rental rates.

By Jay S. Hruska Director Cushman & Wakefield of Connecticut