Small tenants spur Westchester; Fairfield rebound near complete - commercial leases in Westchester County, New York; Fairfield County, Connecticut - Review and Forecast Section III

Relatively small, local tenants dominated the Westchester County Real Estate Market for the first quarter of 1994 and demand for space by these entrepreneurial and satellite companies will continue to contribute to the stabilization of the Westchester market.

There is presently 7.05 million square feet of space available in the Westchester market. The good news: There is no indication that new major blocks of office space will be vacated in the immediate future. The bad news: The county-wide availability rate increased 51 basis points since year end 1993. As we enter the second quarter of 1994, all arrows point to a slow recovery.

Although the Westchester Count, real estate market is being driven primarily by small tenants. three transactions in excess of 20,000 square feet were completed county-wide in the first quarter of 1994: HIP's expansion at 15 North Broadway; Nextel Communication's 32,000 square-foot branch at 1 North Broadway and Taro Pharmaceutical's 22,450 square-foot expansion at 5 Skyline Drive.

Other large companies like Ciba Geigy, which is presently in negotiations with Halpern Enterprise for 200,000 square feet of space for their headquarters and, new lab facilities, are now starting to find Westchester County desirable. These larger companies are discovering what many smaller companies already have: the benefits of relocating to Westchester County. Westchester's serene quality of life, suburban setting and the excellent transportation system still remain the key factors that lure companies to settle in Westchester's suburban market.

Small tenants are supporting the recovery of the Westchester County real estate market, but they are not Westchester County's only bright light. The competitiveness of deals, increase in availabilities and wide array of concessions available, provide tenants unprecedented opportunities - both large and small.

In Fairfield County, the vacancy rate is dropping - fast - and recovery is well underway. The County's overall availability rate dropped 119 basis points since year end 1993 closing the quarter at 19.79 percent. By year end 1994, the overall vacancy rate could be as low as 18 percent for the Fairfield County real estate market.

Leasing activity in 1994 is already exceeding levels reached in 1993 for Fairfield County. First quarter 1994's leasing velocity surpassed first quarter 1993's square feet leased by 44.37 percent. Clearly, the Fairfield County real estate market has well emerged, from the doldrums.

Fairfield will continue to experience dramatic leasing velocity in Class A properties. This trend, partly due to a sustained decline in rental rates, will result in a tightening of availabilities in the higher quality space.

It has been a good year for Fairfield County and the future tooks bright. Over the next two-to-four years, Fairfield County's supply of space will be absorbed, opening the way for a new period of development followed and leasing activity.

The turnaround for Westchester County and Fairfield County is in sight. Patience will continue to be the virtue guiding both of these real estate markets.

COPYRIGHT 1994 Hagedorn Publication
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