If Nielsen could come up with a high-tech box to track commercial real estate market demand in Fairfield County, it might get no better a read on tenant intent in the first half of 2010.
And it should know, being a new tenant itself.
In June, the Nielsen Co. L.L.C. took a lease for 55,000 square feet at 40 Danbury Road in Wilton. Dubbed Wilton Corporate Park, the building is owned by Davis Marcus Partners and Prudential Real Estate Investors.
Also taking space at 40 Danbury Road was TD Bank N.A., which will occupy 10,000 square feet. Other tenants in the complex include Tygris Commercial Finance Group, NuCompass Mobility and Louis Dreyfus Corp.
Despite the big lease by Nielsen, area real estate brokers say they have yet to track any surge in leasing activity ”“ although sublease space is on the decline, a possible bellwether on future activity signaling companies have less excess space on their hands.
Vacancy rate drops
Still, for the first time since the fourth quarter of 2008, the commercial office vacancy rate in Fairfield County appeared to drop, according to Colliers International, a commercial brokerage service with a Stamford office that tracks activity in 750 buildings in Fairfield County totaling more than 51 million square feet of space.
The company calculated a vacancy rate of 13.2 percent in the second quarter, down from 13.3 percent in the first quarter but still well above the 11.2 percent vacancy rate of a year ago.
The vacancy rate records offices currently empty ”“ Colliers computed a nearly 1 percent rise in the office availability rate to 22.8 percent in Fairfield County, with the figure capturing both vacant offices and those in which tenants have given notice of plans to move.
“My overall sense is ”¦ we are really bumping along,” said Gerard Hallock, executive managing director of Colliers International. “We are a little bit up and a little bit down.”
Fewer deals done
On a net basis, landlords leased an additional 83,000 square feet of space during the quarter, sufficient space for about 400 workers depending on the measurement used.
On the flip side, there were far fewer deals done than in the preceding three quarters.
Average rents again dropped slightly, with Colliers International computing a county-wide average of just under $30 a square foot, down a dollar from the fourth quarter last year.
Hallock thinks the trend may have hit its nadir.
“We”™ve reached our peak of giveaways ”“ free rent, work allowances,” he said. “There”™s some landlords where it”™s almost two years before they get a penny.”
Continued sluggishness
The local activity comes against a backdrop of continued sluggishness on a commercial property price index published by Moody”™s Investors Service, with a CPPI index on New York City offices off nearly a quarter from a year ago.
“The proportion of ”˜troubled asset”™ sales in the CPPI increased slightly,” said David Geltner, a Massachusetts Institute of Technology economist who developed the index, in an accompanying report. “Yet in spite of this the overall CPPI advanced in April due to the very strong performance of ”˜healthy”™ properties ”¦ The healthy property index is now only 33 percent below the October 2007 peak, while properties falling into distress since then are still selling more than 50 percent below 2007 values on average.”
For its part, Colliers plans to begin publishing a “market makers” index that tracks the leasing record at the 10 top office buildings in Stamford and in White Plains, N.Y. Hallock said the goal is to provide potential buyers a baseline for the degree to which tenants are willing to “pay up” for the best space available in the market.
