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STAMFORD-Although the office vacancy rates in Fairfield County’s key markets are on the rise due to lower demand, the new space on the market has helped ease tight market conditions, area brokers contend.

While the economic slowdown has caused new space to come on the market of late, the downturn has not yet convinced Fairfield County property owners to lower their asking rents, according to a number of market reports released by area brokerage firms.

For example, Kim Mowers, senior vice president of Grubb & Ellis’ Stamford office, relates that despite some new space coming on the market recently, property owners are seeking rental rates consistent with first-quarter prices.

“As a result we are not seeing an overall drop in rates as one might expect,” Mowers says. “Countywide average rents for Class A space are holding firm at about $37 per sf and for class B space at $25 per sf. High occupancy levels and long-term leases supported landlord’s pricing.”

Grubb & Ellis officials note that the new market vacancies are predominantly sublease space. In Stamford, 24% of total vacancies are sublease space, up from 18% of the market in the first quarter of this year. In Central Fairfield County, another market that has been very tight in terms of available space, 25.2% of the space now available is in the sublease market, up from 17% last quarter.

Mowers continues, “The slowed economy is causing businesses to reconsider their space requirements, New direct space is concentrated in Class A buildings and is asking between $40 per sf and $48 per sf on a full service basis. While these asking rents are consistent with asking rents for the previous quarter, the new space is tilting the average asking rents upward by $1.75 per sf.”

Belinda W. Scanlon, senior vice president of Albert B. Ashforth Inc., of Stamford, concurs that although office vacancies are on the rise, rental rates are not dropping in Fairfield County.

“The increase (in office vacancy rates) is directly related to the 1.2 million sf of sublease space on the market,” she notes. “However, this is definitely not an economic indicator that our existing corporate base is eroding.”

Albert B. Ashforth officials state that the averaging asking rent for Class A space in Fairfield County stood at $33.04 per sf at the end of June, up more than a half-a-dollar from the $32.42 per sf rate posted in the first quarter of this year.

Cushman & Wakefield’s Kenneth Krasnow says that companies looking to relocate or expand in Fairfield County now have space options they did not have earlier this year.

“The good news is that we’ve returned to a stabilized market.” Krasnow, who is regional managing director of Cushman & Wakefield of Connecticut, says. “One of our primary responsibilities is to find suitable space for our clients, and one year ago the market was so tight that our clients were hampered by limited choices.”

He continues that although office availability rates are rising, (Fairfield County’s rate rose to 12% at the end of the second quarter, up from 6.7% at mid-year 2000) leasing activity thus far in 2001 is still “a respectable 1,190,306 sf” in Fairfield County. However, leasing volume is down from nearly 2.4 million sf registered in the first six months of last year. “Simply put, corporate expansions, which in part fueled last year’s boom, are on hold,” Krasnow says.

“Traditionally we see that when times are tough, companies often make the decision to move to Fairfield County to escape the prohibitive costs of New York City, which still remain considerably higher,” he adds. “With pressure on bottom line results, companies are evaluating every option to save money.”

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