Oct. 21–While lower Fairfield County waits for the economy to improve, the region’s supply of rentable office space in the third quarter remained much the same as it was in the previous quarter anda year ago. The county’s availability rate — which includes vacant offices and space scheduled to be put on the market within the next several months — was 18.9 percent as of Sept. 30, according toan average taken from five real estate firms’ statistics.
The countywide figure was 18.9 percent in the second quarter of this year and 18.3 percent in the third quarter of last year, five firms reported. A 1 percentage point rise in availability means about 417,000 square feet of office space has returned to the market. The county has about 41.7 million square feet of office space in nearly 600 rentable office buildings, according to the Stamford-based brokerage Albert B. Ashforth Inc. In the past quarter, new leases took about 206,854 square feet off the Fairfield County market, according to the Stamford office of CB Richard Ellis Real Estate Services.
“We have not seen huge blocks of space coming onto the market and demand for office space has picked up,” said Dean Shapiro, senior managing director of CB Richard Ellis’ Stamford office.
Shapiro said companies that were reluctant to lease space during uncertain economic times might be ready to lease more now. That was the case in Greenwich during the past quarter. Expansions and relocations among hedge funds and financial services firms helped reduce the town’s office space surplus to 12.3 percent in the third quarter, down from 15 percent in the second quarter and 12.5 percent in the third quarter of last year. Greenwich has about 4.8 million square feet of office space.
Greenwich’s recent leases by hedge funds included two expansions within town and a relocation from New York City. Amaranth Advisors plans to grow from 25,000 square feet to 123,000 square feet at the Greenwich American Centre office complex. Sagamore Hill Capital Management expects to move from 6,726 square feet at Greenwich Office Park to 18,925 square feet at the Mill complex in Greenwich by the end of the year.
A Manhattan hedge fund, AQR Capital Management, is scheduled to relocate to Greenwich Plaza in downtown Greenwich in the spring. “The town is becoming very much a single-tier environment, which is wonderful if hedge funds stay strong and continue to grow,” said John Goodkind, managing principal with the Greenwich office of New York City-based Newmark & Co. Real Estate Inc.
Goodkind said companies will head to Stamford as Greenwich office space gets more scarce and costly.
But they have not yet done so en masse.
Office space inventories increased slightly in Stamford and Norwalk. As of Sept. 30, 18.5 percent, or about 2.68 million of Stamford’s 14.5 million square feet of office space was up for lease or sublease, according to an average from five firms’ figures. That amount is up from 17.9 percent in the second quarter and 18.1 percent a year ago.
Numerous buildings in the city have vacancies, including the 393,000-square-foot Stamford Harbor Park on Ludlow Street, which has about 86,420 square feet available. Several small companies left the building, said Ed Tonnessen, executive vice president with Albert B. Ashforth. One company’s plans to move from Stamford Harbor Park will benefit Norwalk’s office market. Graham Capital Management, a hedge fund, bought two buildings in Norwalk’s Rowayton section this year and expects to relocate there next year.
About 22 percent of Norwalk’s 4.6 million square feet of office space was up for lease or sublease in the third quarter, compared with 21.5 percent in the second quarter and 27.3 percent a year ago, averages from five firms indicated.
GE Commercial Finance’s plan to lease 221,000 square feet at Merritt 7 Corporate Park also helped the Norwalk market, Shapiro said. Mirroring its office space supply, Norwalk’s average asking rents remained stable.
The city’s average asking rent for Class A space was $28.60 per square foot per year in the third quarter, compared with $28.90 in the previous quarter and $29.62 in the third quarter of 2002.
Stamford’s average asking rent for Class A space was $33.13 in the third quarter, down slightly from $34.04 in the previous three-month period and $35.69 a year ago.
Reflecting its tighter office space situation, average asking rents in Greenwich were $43.87 in the third quarter, compared with $42.38 in the previous quarter and $47.78 in the third quarter of last year. Countywide, the average asking rent for Class A office space was $30.27 as of Sept. 30, down slightly from $31.08 in this year’s second quarter and $31.67 a year ago.
Westchester County’s average asking rent for all classes of office space was $24.64 in the third quarter, compared with $25.18 in the previous quarter and $24.81 a year ago, according to Newmark. About 14.5 percent of the county’s 35.5 million square feet of office space was available for lease or sublease in the third quarter, compared with 14.4 percent in the previous quarter and 15.1 percent in the third quarter of 2002, Newmark reported.
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(c) 2003, The Stamford Advocate, Conn. Distributed by Knight Ridder/Tribune Business News.
