Insignia report shows healthy Fairfield growth.

Fueled by unprecedented business expansions within the county, the Fairfield County office market finished the first half of 2000 with big gains in leasing activity and net absorption, further tightening an already space-restricted office market and driving midyear availability rates to record lows.

According to the Insignia/ESG Midyear Commercial Report, more than 3 million square feet of office space was leased in the county over the past six months, a 37% gain from the same period a year ago. Net absorption countywide soared to more than 1.8 mil lion square feet, an extraordinary reversal from 507,680 square feet of negative absorption of in the first half of 1999. As a result, the supply of available office space in Fairfield fell more than 30% over the past 12 months to 3.7 million square feet and the availability rate shrank almost four percentage points from midyear 1999 to a record low of 8.4%.

According to Dean J. Shapiro, executive director of Insignia/ESG's Westchester-Connecticut office, "The results for the first half of 2000 truly testify to the fundamental strength and vitality of the Fairfield County economy, as well as its growing self-sufficiency. Barely a year after it was hit with more than 400,000 square feet of vacated space, the office market has staged a remarkable recovery and positioned itself for yet another record-breaking year With few exceptions, nearly every area is enjoying the fruits of the boom."

While several large transactions took place in the county during the first half of the year, including Priceline.com's 122,000 square feet in Greenwich and Microcast, Inc.'s 92,050 square feet in Danbury, leading velocity was marked by an increase in mid-sized transactions. Deals totaling between 10,000 and 50,000 square feet accounted for more than 45% of the overall leasing year-to-date, while demand for the same units accounted for just 30% of last year's activity. As a result, the average size lease at midyear measured 10,434 square feet, up more than 12% from 9,283 feet 12 months ago.

Although the retention and expansion of major firms benefit the county's economic strength and prosperity, their recent proliferation has brought about a growing crisis in the office market's ability to accommodate further growth. Mr. Shapiro noted that large blocks of contiguous space in existing buildings are nearly impossible to find in Lower Fairfield County. Downtown Stamford, especially, is experiencing dire conditions -- accommodations larger than 100,000 square feet in existing building are completely void. This situation may change quite rapidly, however, in the near future. The recent merger of International Paper and Champion International has led to speculation that a large amount of space may become available at Champion's headquarters in downtown Stamford. "Up until recently, this news would have been greeted with anxiety; today, however, brokers and tenants alike feel a sense of relief that some high quality space may soon be available in a market where vacancy in prime buildings is far below equilibrium," said Mr. Shapiro.

Interestingly, smaller Stamford and Greenwich tenants also have difficulty finding space in prime buildings, and when they do, they encounter rents that resemble Manhattan more than Connecticut. In some choice properties in Greenwich, particularly, landlords have achieve rents exceeding $60,00 per square foot -- one reinsurance company recently signed a lease for space at Greenwich Plaza at a price considered the highest rent ever agreed to for a large deal in Fairfield County. The countywide average asking rental, though, is far more affordable: the current $26.28 per square foot is $1.86 per square foot higher than June a year ago. Asking rents ranged from $18.97 per square foot in the Fairfield North submarket to $32.10 per square foot in Fairfield West.