 
For a long time, Richard O”™Brien focused his commercial real estate activities on the South and West, where rapid population growth was driving up values.
With office values dropping 15 percent to 20 percent, the Ridgefield resident is now keeping an eye peeled on the local market.
O”™Brien”™s Athena Real Estate L.L.C. has begun managing a retail property in Chappaqua, N.Y., and could look for acquisitions in the region if the right opportunities materialize.
In Fairfield County, more than 640,000 square feet of office space came on the market in the first quarter, according to Cushman & Wakefield, almost all of it premier class A offices that command the highest rental rates. The countywide vacancy rate was 16 percent, with Stamford”™s outlying districts having a 22 percent vacancy rate, the highest of any pocket in the county; and Fairfield”™s 3 percent rate making it the tightest market.
Westchester County, N.Y. had a slightly higher vacancy rate at 17 percent.
Property owners and managers on both sides of the border are making adjustments in an attempt to keep lease activity up, while controlling costs. The family owners of the Chappaqua property hired Danbury-based Athena to oversee operations, including vendor relationships.
On a grander scale, New York City-based RFR Realty Inc. announced it is investing millions of dollars for improvements at its seven office buildings in downtown Stamford ”“ both aesthetic touches such as an outdoor reflecting pool and practical changes such as carving floors up into smaller units to accommodate small firms.
Margaret Carlson, director of RFR operations in Stamford, said the company sees the investment as essential in an economic environment where competition is fierce.
A manager with A.D. Phelps Inc. said she noticed an immediate halt in leasing activity at the company”™s Merritt 7 Corporate Park in Norwalk last September after the collapse of Wall Street. According to Cushman & Wakefield, less than 230,000 square feet of space was leased in the fourth quarter last year, compared with just more than 400,000 square feet in the first quarter of this year.
“In November, we said we are either going to sit here on our hands for the next 12 to 18 months, or we could do something else,” said JoAnn Brennan-McGrath, director of leasing for Merritt 7. “Everybody saw blood on the street.”
Merritt 7 is currently marketing three large spaces, after decisions by ABB Ltd., Eastman Kodak Co. and Life Technologies to close their offices. In March, the company held an open house for brokers to hear more about what prospective tenants were looking for.
The feedback boiled down to two three main elements, according to Brennan-McGrath ”“ price, with tenants looking for a 20 percent discount from previous rates; relatively short-term leases topping out at three years; and turnkey installations in which the landlord picks up the cost of renovations to suit the tenant.
What is not happening yet is companies looking to lock in long-term leases at the current discounts in anticipation of an eventual recovery in the economy ”“ and presumably renewed inflation in commercial rents.
“We are now ”¦ seeing the first signs of hope in the economy and we expect to see the real estate market follow suit,” said Jim Fagan, senior managing director of Cushman & Wakefield. “As painful as the market is for landlords and owners who are long on space, there are significant opportunities for tenants and investors to acquire space at historically low levels.”
McGrath said she is similarly hopeful that companies have absorbed the worst of the economic shocks and are looking ahead to better times.
“I have more activity now in the past two to three weeks than I”™ve had in months,” McGrath said.
