Stephen B. Siegel, president of Insignia Financial Group Inc., and chairman and chief executive officer of Insignia/ESG, spoke on the national and New York City office markets. Dean J. Shapiro, executive director of Insignia/ESG's Westchester/Connecticut operation, offered a detailed look at those two suburban office markets at the company's briefing held on Tuesday at the Indian Harbor Yacht Club here.

The brokerage firm released preliminary availability figures for Westchester and Fairfield for the first quarter of 2003. The office availability rate in Westchester stood at 15.5% at the end of the first quarter 2003, up slightly from the 15.1% posted 12 months ago. Meanwhile Fairfield County's availabilities shot up almost three percentage points from a year ago to a rather hefty 18.6%.

Downtown White Plains, which has been the focal point of new development and some significant leasing deals of late, saw its office availability rate rise from 21.5% at the end of the first quarter of 2002 to 22.5% after the first three months of 2003. Downtown Stamford saw its availabilities rise almost three percentage points from a year ago to 16.9% at the end of the first quarter of 2003.

Shapiro said that Westchester should continue to see interest from New York City-based firms looking to decentralize or house their disaster-recovery operations outside of Manhattan. He also was very bullish on the downtown White Plains market.

However, he said that a host of factors have led to a slowdown in demand in Fairfield County, not the least of which is a clogged highway system that hampers employee accessibility. While he expressed optimism that the market will improve in 2003, there is a risk that some sizable blocks of office space could come back on the market this year, which could spike office availability rates higher.

In terms of the national market, Insignia's Siegel said the commercial office market is suffering from a general economic malaise. Although the economy appears to be in the midst of a "soft recovery," the turnaround is coming without job growth, which usually is not good news for commercial brokers, he added.

"Right now, 45% of all transactions are renewals or the result of an expiring lease," he said. In a normal market, only 10% of transactions are renewals and 90% of deals are new business, Siegel noted.

Another major issue affecting office markets throughout the US has been a higher-than-normal amount of available space for sublease. Siegel said that nationally, subleases account for 28% of all the available space on the market. In New York City, 40% of the available space on the market is sublease. In a normal market, sublet space has only a 10% to 15% market share.

He added that current office availability percentage rates in New York City average in the teens. "We think the vacancy rate in New York City will peak sometime around the middle of the year in the mid teens and then you will begin to see some positive absorption," he predicted.