Printer Friendly

RECESSION, CORPORATE MOVE-OUTS AND CONSOLIDATIONS COMBINE FOR SLUGGISH YEAR FOR FAIRFIELD-WESTCHESTER OFFICE MARKET

 RECESSION, CORPORATE MOVE-OUTS AND CONSOLIDATIONS COMBINE
 FOR SLUGGISH YEAR FOR FAIRFIELD-WESTCHESTER OFFICE MARKET
 STAMFORD, Conn., Jan. 6 /PRNewswire/ -- The deepening recession, combined with move-outs and consolidations by several area corporations, resulted in a generally sluggish year for the Fairfield-Westchester region office market in 1991, according to the 1991 Corporate Real Estate Report released today by Rostenberg-Doern Company, Inc. of Stamford, and Purchase, N.Y.
 Although leasing activity in the two-county region was steady last year, absorption, which is the net increase or decrease in occupied office space, totaled just under 18,000 square feet compared to more than 1.5 million square feet of space absorbed in 1990. The region's vacancy rate remained essentially unchanged from the 24 percent reported in 1990. At year's end there was no new construction activity in the region, the first time this has occurred in recent memory.
 In Fairfield County, significant absorption in the Shelton-Trumbull market and strong leasing activity in downtown Stamford helped offset the impact of the relocation of United Parcel Service's headquarters from Greenwich to Atlanta. The UPS move returned 283,000 square feet of office space to the market. Total absorption for Fairfield County last year was 201,850 sq. ft., far below the more than 1 million sq. ft. absorbed countywide in 1990. The countywide vacancy rate was 26.4 percent, down from 27.8 percent in 1990.
 While Fairfield County had the region's largest corporate move-out in 1991, it also had the largest lease transaction in the region, which was the relocation of Phibro Energy, Inc. from Greenwich to 113,000 sq. ft. of space at the Nyala Farms office complex in Westport.
 As a whole, Westchester County's office market fared poorly in 1991, with a negative absorption of 183,970 sq. ft. and a vacancy rate of 20.3 percent. In comparison, Westchester absorbed nearly a half million square feet of space in 1990 and recorded a vacancy rate of 19.0 percent. In contrast, the office market in downtown White Plains was surprisingly strong in 1991, with more than 161,000 sq. ft. of space absorbed for the year.
 Corporate consolidations had a significant impact on the Westchester market in 1991. As part of IBM's continued consolidation from leased office space, the company vacated large blocks of office space in Rye Brook and Valhalla. Other companies that reduced their leased space in Westchester last year included Nestle in Purchase and Towers Perrin in Mount Pleasant.
 The continuing deterioration of the New York City economy played an important role in the region's office market in 1991. Relocations from New York City to the region included Handy & Harman, Conran's Habitat, Central National-Gottesman, KFC National Management, Belmay and Gabelli Asset Management to Westchester; and Elizabeth Arden and Macmillan, Inc. to Fairfield County.
 "We do not anticipate a meaningful recovery in the region's office market in 1992. Our region is not likely to enjoy the benefits of a national recovery until 1993 at the earliest. Until then, state and local governments, along with the business community, must work harder to retain our region's existing corporate base while providing an economic environment in which new businesses can expand their operations," said John H. Rostenberg of Rostenberg-Doern Company, Inc.
 "For the first half of 1992 we are cautiously optimistic that leasing activity will continue to occur with the 5,000 to 20,000 square- foot tenants. A few large companies will continue to study our region for possible relocation from New York City. We anticipate increased activity in the re-sale of foreclosed properties as users and investors sense the price opportunities of these corporate office buildings," Rostenberg observed.
 The survey of Fairfield County's four markets showed:
 Fairfield County Central Business District
 The vacancy rate in downtown Stamford continued to decline in 1991, reaching 23.6 percent, almost two points lower than 1990 and far below the nearly 30 percent vacancy rate of several years ago. Approximately 150,000 sq. ft. of office space was absorbed last year, down from the nearly 560,000 sq. ft. absorbed in 1990. Major lease transactions for the year included IMRS (80,000), Deloitte Touche (60,000), Elizabeth Arden (52,000), Pittston (47,500), Sure Air LTD (37,000), Axel Johnson (20,000), Hewlett-Packard (19,000) and ICL (18,000). Sublease space still accounts for about 20 percent of the Stamford market.
 Fairfield East
 The Shelton-Trumbull-Westport office market was the clear winner in 1991, finishing the year with an absorption of 405,230 sq. ft. The vacancy rate, which reached 37.5 percent in 1990, dropped to 31 percent by year's end. In addition to the Phibro Energy lease in Westport, other major deals in this market included SNET (40,000), Prudential Relocation (40,000), Westport Bank & Trust (22,000), Versyss (19,000) and Ford Motor Credit (12,000), all in Shelton; AIG (33,000) in Westport; and MECA (24,000) in Fairfield. Access to a skilled labor pool and competitively priced rents have made this market attractive to a wide range of companies.
 Fairfield West
 In addition to the move-out by United Parcel Service in Greenwich, this market was hurt by the Phibro relocation from Greenwich to Westport and the American National Can move-out. There was a negative absorption of nearly 412,000 sq. ft. and the vacancy rate increased from 22.8 percent in 1990 to 27.2 percent. On the plus side, Macmillan Inc. relocated its headquarters from Manhattan to 48,000 sq. ft. in Greenwich. Other notable deals included Quantel (10,000) in Darien; Lexmark (23,000), U.S. Chrome (14,000) and H.H. Brown (13,000), all in Greenwich; and Climax Metals (33,000), CB Relocation (40,000) and Scandia (12,000), all in Norwalk.
 Fairfield North
 There were no major changes in the Danbury office market in 1991. Absorption of 60,200 sq. ft. was down slightly from 71,300 sq. ft. absorbed in 1990. The vacancy rate fell from 26.0 percent in 1990 to 24.2 percent at year's end. Notable deals included Benckiser relocating from Greenwich and expanding to 40,000 sq. ft. in Stillriver Corporate Park, GECC (10,000) and Fujitsu Imaging System's relocation within the market. Union Carbide's recently announced plans to spin off its Linde gas division and sell about $500 million in other assets could have an impact on this market in 1992.
 The survey of Westchester County's five markets showed:
 Westchester County Central Business District
 Downtown White Plains has regained its position as the county's strongest office market, absorbing 161,440 sq. ft. of office space in 1991, a turnaround from the negative absorption of 106,660 reported in 1990. The city's vacancy rate fell slightly from 20.7 percent in 1990 to 20.3 percent. Major leases in 1991 included Addison-Wesley (35,753), Lawyer's Title (10,500), Liberty Mutual (10,000) and KFC (7,500), all at Ten Bank Street; County Surrogate Court (20,000) at Courthouse Square: Chicago Title (20,000) at 235/245 Main Street; and Bennett, Kielson at One Barker Avenue. IBM expanded an additional 37,000 sq. ft. at Westchester One.
 Westchester East
 The I-287 corridor from White Plains to Harrison, which led the county in leasing activity in 1990, experienced a sharp downturn in 1991. This market, which absorbed more than 366,000 sq. ft. in 1990, suffered a negative absorption in 1991 of 279,330 sq. ft. The vacancy rate rose from 17.6 percent in 1990 to 20.8 percent at year's end. IBM's move from an entire 211,000 square-foot building it leased in Rye Brook, as well as relocations by Hewlett Packard and CIGNA, hurt this market in 1991. On the positive side, the eastern side of the county did attract several companies from New York City, including Gabelli Asset Management, Handy & Harman and Central National-Gottesman.
 Westchester West
 There was active leasing in the western half of the county in 1991, but not enough to offset some move-outs, most notably NBC from 303 South Broadway in Tarrytown. Absorption, which totaled 155,710 sq. ft. in 1990, was a negative 68,890 in 1991. The year's vacancy rate of 18.2 percent was up from 16 percent in 1990. Major deals in this market included M&H Brokerage, UNUM and Digital Equipment. Construction at SCI's 130,000 square-foot building in Greenburgh was put on hold due to the weak market.
 Westchester North
 What began as a strong year ended on a weak note in the northern half of the county. Although this market had absorbed more than 269,000 sq. ft. in the first six months of the year, it ended 1991 with only 9,230 sq. ft. of space absorbed. This was caused primarily by IBM vacating and entire 141,000 square-foot building at 400 Columbus Avenue combined with a 60,000 sublet of space by Towers Perrin at the Summit. The vacancy rate of 25.6 percent was down slightly from 1990's rate of 26.8 percent.
 Westchester South
 This market showed no improvement from 1990. Absorption was generally flat, and the vacancy rate increased from 13.7 percent in 1990 to 14.2 percent. The only lease transactions of note in this market last year were Cablevision Systems Corp. (25,000), MetLife (16,000), Belmay (24,000) and AVR-Universal Motor Lodge (16,000), all which were at Robert Martin's South Westchester Executive Park in Yonkers.
 Rostenberg said that with no new construction on the horizon in either Fairfield or Westchester counties, the market can expect to see some future demand by corporations for build-to-suit facilities.
 "This new construction will be very selective, with no speculative building planned in our region. Any recovery in our region's office market will require a new willingness on the part of financial institutions to loosen up their credit restrictions on commercial construction. Currently, there is no money available for office developers -- even those with established track records of success -- to finance new construction. At the same time, rental rates will have to rise so that any new loans can be serviced. Finding tenants willing to pay those rents will be a major task since other area's of the country will remain very competitive," he added.
 The Rostenberg-Doern Company Corporate Real Estate Report is the most comprehensive report of its kind on the Fairfield-Westchester region office market. Approximately 700 multi-tenant buildings in the Fairfield-Westchester region were surveyed. Government owned and occupied buildings, owner occupied buildings, medical office buildings and buildings under 20,000 sq. ft. were excluded.
 Rostenberg-Doern Company, Inc. is one of the largest independently owned real estate firms in the Westchester-Fairfield region, specializing in corporate real estate brokerage and consulting. Rostenberg-Doern Company, Inc. serves the Fairfield-Westchester region for Oncor International, formerly the Office Network. Oncor International represents clients in more than 165 markets throughout North America and Europe.
 -0- 1/6/92
 /CONTACT: Dean Bender of Thompson & Bender, 914-747-2888, for Rostenberg-Doern Company/ CO: Rostenberg-Doern Company, Inc. ST: Connecticut IN: FIN SU: ECO


TS-OS -- NY018 -- 6852 01/06/92 11:14 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 6, 1992
Words:1837
Previous Article:KENTUCKY CENTRAL LIFE INSURANCE COMPANY DECLARES DIVIDEND, ANNOUNCES PLAN TO REPURCHASE STOCK
Next Article:CONNECTICUT $105 MILLION CLEAN WATER FUND REVENUE BONDS RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --
Topics:


Related Articles
Westchester/Fairfield suffered sluggish '91.
Fairfield gains ground in 1st half; Westchester hurt.
Westchester vacancies jump to 27%.
Availability declines in Fairfield, grows in Westchester.
SHAWMUT NATIONAL CORP. ANNOUNCES BRANCH CONSOLIDATIONS IN FAIRFIELD COUNTY
Westchester vacancy down for first time since 1990.
Economy drives new wave of spec construction.
Availability increases in Westchester and Fairfield.
Fairfield tightens, while Westchester County holds steady.
Westchester/Fairfield Vacancy and rental rates rise.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters