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NEW HAVEN, CT-Growth in the biotechnology sector in downtown New Haven led to a slight drop in the CBD’s availability rate for the first six months of this year, according to a report released by area brokerage firm Insignia/ESG.

Dean Shapiro, executive director of Insignia/ESG’s Westchester/Connecticut office, said, “New Haven business is clearly driven by strong biotech and pharmaceutical companies, core, traditional businesses and secure new economy firms. Though these companies have been affected by the uncertain market climate, they have the financial and management base to withstand the forces, and that translates into a generally firm real estate market.”

Availability remained at near historic lows at 1.8 million sf countywide at mid-year 2001 The office availability rate for New Haven County stayed relatively stable, rising just a half a percentage point to 15.6% as compared to June of last year. Rents continued to rise–2% as compared to June 2000–at $18.73 per sf countywide. On the other hand, leasing velocity plummeted 42% to 383,850 sf in the first six months of this year.

Insignia/ESG officials blame the decline in demand to the hesitation by area corporations to spend capital on real estate. In fact, while the New Haven County area did not see the large amount of space returned to the market as other areas across the country have so far this year, the number of transactions fell sharply countywide as compared to a year ago. Insignia reports that just 44 office transactions were completed by the end of the second quarter 2001, down from 69 last year. Verizon Communications’ 48,690 sf deal at 599 Research Parkway in Meriden was the largest lease so far this year in New Haven County.

In downtown New Haven, although leasing activity fell 45% from last year to 194,740 sf, the amount of space returned to the market fell sharply as compared to last year. Therefore, the central business district posted positive absorption of 281,610 sf for the first half of this year. The city’s availability rate fell less than a half a percentage point to 15.2%.

Shapiro stated that the growth of biotech and other science-related companies affiliated with Yale University has played a key role in the city of New Haven’s commercial office market the past few years. He pointed out that three of the 10 largest lease deals thus far in 2001 were closed by biotech companies or operations run by Yale University. Insignia/ESG officials report that asking rents in the central business district of New Haven rose 84 cents per sf in the last 12 months to $19.70 at mid-year 2001.

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