Suburban markets thrive despite economic slowdown.

Fairfield County's market dynamics during the fourth quarter of 2000 and first two months of 2001 seemed to mimic those of Manhattan: Availability rate increasing slightly due to new vacancies in marginal areas of the market, with rents remaining strong, indicating pent-up demand for office space.

By year-end, Fairfield County average asking rents rose for the seventh consecutive quarter, climbing by more than $.76 per SF from $27.62 per SF the previous quarter. The robust Greenwich marketplace saw rents jump a whopping $1.31 per SF to close the fourth quarter at $42.73 per SF. Interestingly, sublet space in the market averaged more than $40 per SF.

Despite strong ongoing rental growth, Fairfield County's office market does show a few signs of the current economic slowdown. Net absorption is in the negative side of the spec trum, as large blocks of space is returned to the market in Stamford. For instance, over 200,000 square feet became available at the Champion International Building -- an availability soon to be filled by numerous other tenants and International Paper, which is relocating from Purchase, NY. The overall availability rate in Fairfield County jumped from 6.8% to 9.5% by year end, while direct availabilities rose from 5.3% to 7.5%.

In contrast to Fairfield County, the Westchester County market has a completely different face. Although average asking rents continued to climb in the active White Plains CBD office market, reaching $26.40 in the fourth quarter, the overall rental rate for Westchester County as a whole declined marginally, dropping from $24.05 per SF to $23.53.

Alongside the slide in rental rates came a slight increase in availability from 11.8% the previous quarter to 12.5% currently. This is attributable primarily to new sublet opportunities available throughout the Westchester County market, but new tenants are quickly leasing this space at higher rates. Of noteworthiness is that sublease space in the County has increased from a year end total of 421,000 SF to a current inventory of 680,000 SF.

Very much like its counterpart, Westchester County showed negative net absorption of 274,485 SF for the fourth quarter despite strong gains in the Eastern Westchester segment.

It is extremely clear that the Westchester County office market is showing signs of a correction, but the outlook remains optimistic for 2001. As office users begin to feel the effects of a cooling economy, it is likely that tenants from outside the county will seek out real estate opportunities in Westchester as a less expensive alternative.