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Owners Confidence Unshaken in Fairfield County

STAMFORD-Despite a slowdown in activity the last three months in Fairfield County, the confidence of office building owners in the market's strong fundamentals is unshaken, according to Grubb & Ellis.

By John Jordan | Updated on April 26, 2001

STAMFORD-Although space was put back on the market in Fairfield County during the first quarter, office building owners remain confident that their assets will remain stable, Grubb & Ellis officials say. They are staying bullish because over the last two years they renewed leases early and negotiated longer terms for both new and renewed leases. The terms average seven to 10 years rather than the previous norm of three to five. Other evidence that demonstrates the confidence of property owners is that concessions are not dominating negotiations at the moment, according to Grubb & Ellis.

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.

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