New Haven Office Market Defies Economic Doldrums

According to local brokerage firm C.A. White Inc., New Haven has thus far weathered the economic downturn without too much damage to its office market.

The county's overall fourth quarter office vacancy rate fell slightly to 10.5% as compared to the 10.7% rate in the third quarter of 2002.The average vacancy rate in 2002 was 11%. In downtown New Haven, the office vacancy rate rose slightly to 15.7% from the 15.1% rate posted at the end of the third quarter.

C.A. White officials noted that rental rates in Class A buildings in the county have remained relatively consistent at an average of $18.50 per sf on a gross basis.

"New Haven is still in a relatively stable position compared to other Connecticut markets such as Fairfield and Hartford where vacancy rates have escalated over the last several years," says Frank M. Micali, CCIM, vice president of C.A. White, Inc. "We have smaller inventory levels here but, our ability to meet the supply and demand of New Haven area businesses remains on par with larger markets. Real estate markets tend to lag behind the general economy and the immediate future remains uncertain. This will continue until a more predictable economic situation takes hold."Micali said that activity in the fourth quarter mainly featured small firms of 5,000 sf or less moving in or moving out of space. He said that recent activity tends to show a slight increase in office demand as the city still has a shortage of contiguous space of 25,000 sf or more in Class A buildings.

Some of the more significant developments of note in New Haven of late include the gutting of the shell of a 250,000-sf building at the Science Park complex by developer Lyme Properties of Cambridge, Mass. Yale University quietly opened its new $176 million, 457,000-sf lab and research center. A formal dedication of the property, which is part of the university's $500 million commitment to expand its medical school and laboratory space in the next 10 years, is expected soon. Construction on Acorn Development's Granite Square office building at One Audubon St. is ahead of schedule, according to C.A. White. The 60,000-speculative building is now slated for a fall 2003 opening.

Also, Chapel Square Development, LLC, which purchased the Chapel Square Mall and office tower at 900 Chapel St. in 2001, has begun renovations at the mall and the office tower. Renovations at the mall will run more than $10 million, according to the brokerage firm, which also reports that the mall owner is close to a deal with a major tenant for the second floor of the mall. Talks are also progressing with another half dozen prospective tenants at the mall as well, the brokerage firm states.