New Haven office market showing positive trends.
New Haven County's office market activity so far in 1999, by some accounts, could be characterized as a tale of two cities: Milford and Hamden. Between the two, 45 percent of the county's 490,230 square feet total activity was leased, as tenants discovered the affordability of these towns compared to eastern Fairfield County.
Five of New Haven's top ten lease transactions, including the largest lease in more than five years - Warnaco Inc.'s 94,500 square feet at 470 Wheelers Farms Road were completed in Milford or Hamden. Last year, only two of the county's largest leases were completed in these towns all year.
New Haven County also benefitted in the first part of 1999 from a hiatus in the return of large blocks of space to the market. While the county's mid-year availability rate of 19.2 percent still reflects space vacated at the end of last year, the lack of further downsizings led to absorption of almost 220,000 square feet by June 1999.
Most of this absorption came as the result of activity in the non-CBD, which saw its availability rate drop almost three percentage points over the past six months to 18.1 percent. And, while this availability is higher than neighboring Fairfield East. much of the New Haven Non-CBD's unoccupied space resides in four key Class A locations - locations which have seen much of the area's activity this year and expect considerable on-going interest in their available space.
The City of New Haven also saw positive absorption in the first half of the year, as transactions by Pirelli Tire, Veritas Credit Corp. and DSL Communications, among others, impacted the segment.
"The city has now posted positive absorption for the past year and a half, an indication that while activity is generally slower in the central business district compared to the suburban submarket, New Haven is quietly making progress toward eliminating its surplus available space," said Dean I. Shapiro, executive director of the Connecticut-Westchester office of Insignia/ESG. "In fact, over the past year, the city's availability rate has fallen 1.5 percentage points."
The first half of 1999 also saw a significant shift in New Haven County toward larger lease transactions. New Haven has already seen six deals measuring more than 20,000 square feet completed - 1998 saw only seven transactions of that size closed all year. The sheer size of the 1999 transactions also had another impact on the market - the average deal size rose to 10,894 square feet from 7,551 square feet in June of 1998.
In contrast to many of New Haven County's other statistics, which paint a positive picture of the first six months of the year, the average asking rent continues to portray a more somber image of happenings in the area. In the past year, the county's average rent dropped 78 cents per square foot to $18.01 per square foot. "This total, however, can also be looked at in a positive light," noted Shapiro. "Rather than portraying an overall diminution of the rental value in the New Haven market, it illustrates the fact that much of the leasing activity in the market has been in higher quality, relatively expensive space."
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|Title Annotation:||New Haven County, Connecticut|
|Publication:||Real Estate Weekly|
|Date:||Sep 15, 1999|
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