Slow economic rebound in New York City impacts Fairfield County.

Cushman & Wakefield released second quarter statistics for the Fairfield County office market that indicate the slow economic rebound in the New York Metro area continues to affect Fairfield County. While there were pockets off activity, and positive signs of recovery, they were not felt equally throughout Fairfield County.

The Norwalk and Greenwich areas benefited from strong leasing activity. The Stamford CBD suffered as new space was returned to the market. The mixed results for the quarter do not provide clear indication that the recovery in Fairfield County is solidly underway.

Leasing activity in the county was focused in the South Central, Greenwich, and Central submarkets. This was evident in Greenwich's overall vacancy rate, which decreased from 16.4% in the first quarter to 15.7% in the second quarter. Over 124,000 SF was leased in Greenwich during the second quarter, as the financial services industry continues to be attracted to the Greenwich address and amenity package. One notable example was Ziff Brothers Investments, which moved from New York City, to 61,177 SF at 55 Railroad Ave.

"Certain submarkets experienced recovery while others remained stagnant. Overall vacancy and direct vacancy rates for the county increased slightly, but the amount of space and velocity in which it was being added to the market in 2002, lessened in 2003," said Michael B. Gordon, director, business development for C&W's Stamford office.

The South Central submarket captured GE Commercial Finance, which expanded its presence with a lease of 221,000 SF at 201 Merritt 7 in Norwalk. This was the largest transaction year-to-date and worked to reduce the South Central overall vacancy rate dramatically from 26.8% in the first quarter to 23.5% for the second quarter.

Leasing activity for the county increased dramatically in the first six months of the year. At midyear 2002 the total SF leased for the county was 1,106,389 million SF and for mid-year 2003 the total was 1,529,282 SF. Additional significant leases in Fairfield County included: Millward Brown relocating within Fairfield into 35,085 SF at 501 Kings Highway East; and The New England Technical Institute leased 31,500 SF at 8 Progress Drive in Shelton. A further positive sign is the presence of several large tenants in the market in Fairfield County including Cadbury Schweppes, which is looking for over 120,000 SF, and Diageo, which is considering a move from Stamford to Norwalk's Merritt 7 corridor.

Although nearly every submarket had negative absorption, led by the Stamford NonCBD at negative 104,575, the county still ended the quarter with positive year-to-date net absorption. The leasing activity in Greenwich, Norwalk and Fairfield helped total net absorption for the county to remain positive.

Investment sales, which thrived in mid-year 2002, slowed substantially for mid-year 2003. Two building sales occurred in the second quarter. Hewitt Associates sold its headquarters facility at 40 Highland Avenue in Rowayton, after being on the market for nearly two years, to Graham Capital Management. The investment firm purchased the 105,270 SF building for $17.3 million, or $164.34 per SF. Another sale occurred in Trumbull at 40 Lindeman Drive. Cooperative Educational Services, previously a tenant, purchased the 48,500 SF building from New Boston Fund for $5.25 million or $108.25 per SF.