Rollercoaster ride continues for Westchester market.

A combination of slow job growth, a lackluster economic recovery and the prospect of rising energy costs worked to create further volatility for Fairfield County's office market in the first quarter of 2005. Leasing velocity declined compared to the same period of last year and absorption came out negative for the quarter as the forward momentum generated in 2004 stalled due to pressure from limited new hiring and conservative new requirements. Strong leasing and manageable returns in most areas of Fairfield last year, though, kept availability below the first quarter of 2004's level.

For the first time in a while, however, Stamford played little role in this slowdown, as the struggles that have characterized the municipality since the economic downturn seem to have eased slightly in the face of increased demand, tenant retention, some expansion and fewer new space returns. In total, leasing velocity in Stamford exploded 253% from last year to almost 598,000 SF or 59% of the county's activity thus far in 2005. Five of the ten largest transactions took place in the city, including GE Capital's lease of the entire 267,600 SF office complex at 777 Long Ridge Road and UBS's 36,780 SF expansion at 400 Atlantic Street. Much of this activity came from Stamford tenants choosing to remain or expand within the city--in contrast to years of losing tenants to lower cost, less congested areas--enabling positive absorption totaling 18,370 SF of space. Due to weakness in 2004 and the return of space at High Ridge Park and GE Capital's former building at 1600 Summer Street, however, available space in Stamford in-creased 18% from April 2004 to 3.1 million SF.

This progress in Stamford, according to Robert Caruso, Managing Director of CB Richard Ellis' Westchester/ Fairfield office, bodes well for the county's overall performance in the near future. "As the county's business center and the largest submarket, Stamford always plays a major role in Fairfield's overall performance. Increased stability and the retention of several major employers signals the likelihood of good things to come countywide."

That sustained county-encompassing stability will be a welcome change, however, to a market where pockets of strength have provided activity, but not a lot of long term growth. In the first quarter of this year, demand fell 10% countywide from the same period of last year to 1.0 million SF as companies restricted new hiring. They also looked to ease financial responsibilities by returning space to the market or leasing only what is currently needed, causing negative absorption totaling 149,380 SF thus far this year. Last year's strength in the Central and Greenwich submarkets, though, enabled a drop in availability of 2% from April 2004 to 7.5 million SF. The availability rate also remained stable despite this year's negative absorption at 17.1%.

Average asking rent, responding to the addition of high priced space at 1700 East Putnam Ave. in Greenwich, increased $1.48 per SF, or 6%, from last year's rate to $27.58 per SF.

A high correlation to the general economy continued to cause volatility, as well as slow tenant demand, in Fairfield County in the first quarter of 2005. Aside from GE Capital's commitment to move its 1600 Summer St. operation to larger quarters at 777 Long Ridge Rd., nothing resembling Diageo or FactSet's large scale leases of last year took place, causing a dip in demand totaling 10%. Space leased in transactions exceeding 50,000 SF, consequently, also fell 49% from the first three months of last year to 267,600 SF or 26% of Fairfield's total activity. What did increase, however, were bread and butter transactions--major determiners of the office market's health and something that had been missing over the past few years. In total, deals 10,000-50,000 SF jumped 84% from last year to 390,940 SF or 39% of all space leased this year.

In another sign of a potential upswing, Fairfield also saw an improvement in relocations in 2005--a big factor in the county's historical strength, and also something that disappeared during the economic downturn and subsequent period of struggle.

Commitments from outside companies more than tripled from the first three months of last year to 65,870 SF--still a small number when compared to the past, but far more encouraging than the 20,670 SF in the same period of 2004. Because of the GE Capital and UBS deals and several other new, larger commitments, expansions also rose 15% from last year, though the vast number of new transactions were companies moving to similar space within Fairfield County.

Most of these transactions took place in the Stamford, which accounted for 59% of all space leased thus far in Fairfield in 2005, up from 15% last year. In contrast to the past few years, the Central submarket, home of the largest deals of the year in 2004, saw its velocity decrease 69% from last year to 223,620 SF.

The largest transaction this year in the Central segment, in fact, was Stolt Nielson's 29,200 SF lease at 800 Connecticut Ave., Norwalk. Given the impending completion of 901 Main Ave.