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Turnaround imminent in Westchester, Fairfield.

Appointed Executive Director of the Westchester/Fairfield office of the Edward S. Gordon Company, Inc. (ESG) just last month, l get to start the new year off with a fresh perspective on the commercial real estate markets I've covered for more than a decade. Fortunately, from where I now sit -- and given the year-end data on both Fairfield and Westchester counties -- in my opinion it appears that both markets are poised for a turnaround.

Fairfield County, the site for nearly 2.7 million square feet of leasing activity last year, is further along in the recovery cycle. The market does have to deal with its more than 9 million square feet of available space (resulting in an availability rate of approximately 26 percent). Nonetheless, Fairfield County displayed one of the most promising statistics possible these days: positive net absorption.

In other words, for the first time since 1985, more space was taken off the market in Fairfield County as a result of leasing activity than was added to the market because of moveouts, consolidations or closings. This net absorption factor, positive throughout the county with the exception of the Eastern submarket. indicates that Fairfield County is pulling out of the bottom of the "success cycle" of commercial real estate. In fact. if the velocity of leasing activity remains as hearty' in the new year as it was in 1992 -- barring any major surprises -- I predict a strong, positive year for the Fairfield County office market.

The picture of Westchester County isn't quite as upbeat. However, this office market, which had a 26.5 percent availability rate at year end 1992 (compared with the 23.2 percent charted a year earlier), actually outperformed conventional expectations.

Even though the availability rate climbed (the result of a number of buildings being added to the market), leasing activity totalled 2.35 million square feet for the year. Such robust velocity is a positive sign on its own, but it is especially important to note that 20 percent of that leasing activity was done by 'immigrating" companies, relocating from New York and other markets to Westchester County.

Another positive indicator: Sublease space (which totals about 10% of the total available square footage in Westchester County) had been expected to hinder the leasing efforts of the direct space market. However it became evident that direct space - priced to lease - was competitive enough to account for the lion's share of last year's activity: Ninety-six percent of last year's deals were done on a direct basis.

As I look forward to 1993, it's nice to be able to keep up the 'broker tradition of optimism. But it's even more satisfying since I've got the hard numbers to back it up.
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Title Annotation:Review & Forecast, Section II; commercial real estate market expected to improve in Westchester and Fairfield counties in New York
Author:Siegel, Michael H.
Publication:Real Estate Weekly
Date:Jan 27, 1993
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