Availability rates scaled back from 9% at year-end 2000 to 11.2% at the end of the first quarter. The return of direct space was the predominant force behind the increase in available inventory. The return of sublease space, however, will begin to outpace direct space and will compete favorably in price to expedite disposition. Average asking rents, therefore, may dip in markets where owners are competing with sublessors for similar tenants.
Kim Mowers, senior vice president of Grubb & Ellis' Stamford office, says he expects the trend of negative absorption in Fairfield County to continue for the next two quarters. However, he predicts activity will increase beginning in the fourth quarter of this year, pushing office absorption into the black. In addition, while the cost of sublease rental space will decline, the cost of direct lease space will "stay firm," he says.
"I think that in the next two quarters you will still see some moderate activity in Greenwich and I think the Norwalk corridor is where you will see a lot more activity," he adds.
According to the firm's first quarter market report, new construction and redevelopment was concentrated in Central Fairfield County where the Route 7 corridor is becoming the frontier of development and tenant relocation Reflective of the desirability of Central Fairfield County, new class A space is coming on the market in the $30 per sf to $50 per sf range. Compared to the first quarter a year ago, overall lease rates were up $6.70 per sf. During the first quarter of 2001, in Fairfield County the asking rental rate of class A and B space was $33.10 and $22.10 per sf, respectively. The asking rental rate for class A and B space in Stamford is much higher at $40.14 and $29.83 per sf, respectively, Grubb & Ellis officials say.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
