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Westchester/Fairfield suffered sluggish '91.

Westchester/Fairfield suffered sluggish |91

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 by Rostenberg-Doern Company, Inc. of Stamford, Connecticut and Purchase, New York.

Although leasing activity in the two-county region was steady last year, absorption 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 square feet, far below the more than 1 million square feet 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 square feet 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 square feet 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 square feet 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," said John H. Rostenberg of Rostenberg-Doern Company, Inc. "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.

"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."
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Title Annotation:Connecticut counties
Publication:Real Estate Weekly
Date:Jan 22, 1992
Words:577
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