Vacancy rates rise in Fairfield, Westchester office markets.
Unfortunately, Fairfield County's numerous financial services companies, along with a proliferation of business services firms, continue to be the hardest hit by the downturn in the economy. Over the past year, a total of approximately 1,750,572 SF of space was placed onto the Fairfield County market, 1,050,705 SF being sublet space.
Fairfield's Greenwich submarket experienced the largest increase in its availability rate which jumped from 16.25% to 21.10%, as the amount of available sublet space in the area nearly doubled. In fact, Greenwich's sublet availability rose by more than four and a half percentage points to close the quarter at 12%. Witco made the decision to vacate 290,000 SF at the complex while Walter Karl announced it would be vacating its 70,000 SF. In contrast to the Greenwich submarket, Fairfield's Stamford submarket demonstrated steady market fundamentals with availability only increasing slightly from 11.37% to 11.81%.
Overall asking rents in Fairfield climbed from $29.22 to $29.32 per SF with direct rents increasing from $28.32 to $29.07 per SF. Meanwhile, sublet rents dropped from the record levels set a year ago, sliding from $31.70 to $31.47 per SF. Interestingly, large blocks of premium Class A space in Stamford which have been leased in the past few months at below market values, are now forcing asking rents downward.
Despite remaining relatively insulated from the national recession for the better part of the year, Westchester County is finally experiencing the economic pinch felt throughout other major U.S. suburban markets. During the fourth quarter of 2001, Westchester posted 819,000 SF of negative net absorption which helped its availability rate climb from 13.78% to 16.42% -- reaching levels not seen since in more than two years.
While the market's sublet availability dropped slightly from 2.45% to 2.35%, its direct availability jumped considerably, from 11.32% to 14% as this segment posted 847,000 SF of negative net absorption. Law firms and other types of small businesses continue to drive the activity in the area. Free from the massive corporate layoffs facing Fairfield County, the Westchester market should remain steady in upcoming quarters.
Average asking rents in Westchester County dropped to the lowest levels since the fourth quarter of 1998, falling from $24.75 to $22.04 per SF. Both direct and sublet asking rents slid - from $24.31 and $26.76 per SF to $21.72 and $24.30 per SF, respectively. Eastern Westchester witnessed the largest decrease in prices as rents fell from $28.05 to $20.95 per SF. In order to remain competitive, landlords have finally adjusted their asking rents in order to stir up more demand.
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|Author:||Goodkind, John D.|
|Publication:||Real Estate Weekly|
|Article Type:||Brief Article|
|Date:||Jan 30, 2002|
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