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STAMFORD, CT-Several area brokerage firms report that the slowing economy as well as the terrorist attacks of Sept. 11 have caused many companies to put some space on the sublease market in Fairfield County. That glut of new available space has also placed downward pressure on office rental rates.

John Stoddard, a broker with Albert. B. Ashforth Corporate Real Estate Brokerage of Stamford, says that although office vacancy rates have risen recently due to a slowing economy and the after effects of the terrorist attacks of Sept. 11, the Fairfield County office market is not as weak as the vacancy numbers might indicate. Albert. B. Ashforth reports that the third quarter office vacancy rate for Fairfield County rose from 10.5% in the second quarter to 11.9% at the end of the third quarter.

Stoddard notes, “There is a large amount of space that tenants intend to sublease. This means that while space may technically be available to a subtenant, it is nevertheless providing landlords with rental income.”

While he adds that the county’s office market is experiencing a downturn, some sectors continue to show inherent strength, particularly Class A space. For example, he notes that just 149,000 sf of the 879,000 sf of new office space built in Fairfield County in the past year has been absorbed.

Also, Stoddard notes, “The highest quality buildings with the most services that usually come with the highest prices are the buildings with the lowest vacancy rates. The buildings most affected (by the current economic downturn) are the oldest in their class with the least amount of services available.”

Officials with Insignia/ESG also acknowledge a market slowdown in the third quarter, but say that this market will rebound. Dean Shapiro, executive director of Insignia/ESG’s Westchester/Connecticut office, charges that although the Fairfield office market has seen a complete reversal of fortunes from its record leasing volume levels in 2000, the county’s office market performance of late has been in line with other areas across the country.

“Fairfield County’s dominant industries — finance and service — are among the most affected by the usual fluctuation in the business cycle, never mind such earth-shattering events as the attacks on the World Trade Center and Pentagon. I am confident that once the national situation stabilizes, the strength this market has already shown will lead back to more normal activity levels.”

Both brokerage firms report that the current amount of sublease space on the market (1.3 million sf) accounts for just over 25% of all office space available in Fairfield County. Stoddard says that there is 400,000 sf of sublease space available in Stamford, 290,000 sf in Greenwich, 330,000 sf in the central market of: Darien, New Canaan, Norwalk and Westport, 210,000 sf in the northern market which includes: Bethel, Danbury, Ridgefield and Wilton and 125,000 sf of sublease space in the eastern market that covers: Bridgeport, Fairfield, Shelton, Stratford and Trumbull.

He adds that the large sublease space inventory has begun to put downward pressure on asking rental rates. He says that in Stamford, asking rental rates fell by $1.50 per sf in the third quarter of this year.

Insignia/ESG’s Shaprio agrees that some signs of rental decreases are beginning to show up. He notes that average asking rental rates increased by more than 11% or $3.14 per sf to $30.77 per sf in the third quarter as compared to a year ago. However, the third quarter countywide rate actually fell five percent or $1.72 per sf as compared to the average asking rental rate posted at the mid-year point of this year.

While asking rental rates are still high for both direct and sublease space in most Fairfield County market, Shaprio notes that taking terms are now becoming “very flexible.”

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