The overall availability rate for Fairfield County stood at 17.51% at the end of the second quarter, down from the 18.57 percent rate posted at the end of the first quarter of this year. However, the second quarter availability rate at the mid point of 2003 was up almost one percentage point from the 16.55 percent rate recorded in June 2002, according to Insignia/ESG figures.

Dean Shapiro, executive director of Insignia/ESG's Westchester-Connecticut office, notes that although statistics seem to indicate the beginning of a recovery in Fairfield County, weakness in the Stamford and the Eastern submarkets will most likely postpone any real gains.

"Cautious optimism--that's the key word in describing Fairfield County's first half outcome," he says. "While renewed leasing and positive absorption are key factors in a recovery, there's still potential for further strains on the market in the future."

The City of Stamford's office availability rate fell to 16.42% at the end of the second quarter 2003, down from 16.91% three months ago and the 17.07 percent rate posted 12 months ago. The Eastern submarket (which includes the city of Norwalk) had a 17.14% availability rate at the end of June 2003, down from 18.14% at the end of the first quarter, but still up significantly from the 13.79% rate registered at the end of the second quarter 2002.

Shapiro said that although leasing activity has picked up somewhat in Stamford, the city would have suffered negative absorption for the first six months of this year if Xerox did not take its 255,000-sf headquarters building off the market. Insignia officials said if the Xerox space were still on the market, Stamford's availability rate would have been higher than last year's second quarter rate of more than 17%.

Another troubling sign for the Stamford market stems from reports in the brokerage community which indicate that Diageo LLC, a major tenant in downtown Stamford, is considering relocating to Norwalk, Shapiro says. Such a deal could result in as much as 400,000 sf of space being put back on the market for lease in the city.

He notes that Fairfield County's office sector has made some headway from the massive amount of space that was returned to the market at the end of 2002. In the first six months of 2003, leasing velocity rose 10 percent as compared to the same period a year ago.

"The terrorist attacks of 2001 and ensuing economic downturn led many companies to postpone or cancel decisions regarding space requirements," Shapiro says. "In the first half of 2003, this trepidation seemed to ease slightly, as savvy tenants, and those forced to look for space because of lease expirations, chose to take advantage of the weakness in the market and unprecedented incentives from owners anxious to lease vacant space or retain existing tenants through early renewals at the current rates."

Owner flexibility and low-priced sublease transactions caused average asking rents to fall in most geographic markets in Fairfield County. The countywide asking rent as of June 2003 stood at $26.84 per sf, down from $27.09 per sf at the end of the first quarter and $29.22 per sf a year ago. Downtown Stamford's asking rent continues its decline under the $30 per sf mark. At the end of the second quarter of this year, the rate was $29.31 per sf, down from $29.52 three months ago. A year ago, the average asking rent for space in downtown Stamford was $31.98 per sf.

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John Jordan

John Jordan is a veteran journalist with 36 years of print and digital media experience.