"There has definitely been a softening (in terms of leasing interest and volume)," Gubner says. "However we still see a lot of activity in both markets." He also says, "Connecticut's Fairfield County and New York's Westchester County continue to attract a great majority of companies relocating to the area. The region's appeal lies in its exceptional quality of life, a highly skilled employment base, a tremendously diverse population and a commerce environment not easily rivaled."
He continues, "In all sectors of the marketplace, with the exception of office, conditions continue to remain stable." Gubner notes that the industrial vacancy rate in Westchester and Fairfield is well under 10% and the vacancy rate for retail stands at about 3%for the region.
In terms of the office market, he reports that some sublease space has become available in Westchester and Fairfield. Downtown here, for example, Cendant's relocation to Norwalk has brought approximately 160,000 sf of sublet space in three Downtown buildings on Summer Street to market. Also Downtown, approximately 175,000 sf of space is now on the market for sublease as part of the fallout from the sale of 400 Atlantic St. by Champion International.
He adds that both Westchester and Fairfield County office vacancy rates are relatively low and rents have been on the rise. In Fairfield County, rents are averaging nearly $40 per sf for class A space in some markets while retail space is fetching $70 per sf in prime market areas. Westchester County rents have approached $30 per sf and industrial rents there have surpassed $10 per sf.
"While positive market conditions have traditionally spurred new development," Gubner says, "there is little threat of an 80s like over-development in the area. Almost 75% of the region's product was constructed within the last 20 years, allowing very little need for massive redevelopment efforts."
He continues that few new office projects have broken ground of late, due mainly to "cautious developers and restrictive financing," which dictate securing anchor tenants prior to construction. Another positive for the region is its diverse economic base. For example, Gubner stresses that the local market's exposure to the volatile high-tech market is minimal and therefore its potential negative effect on the commercial real estate market will be minimal as well, he concludes.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
