However, numbers can be deceiving. Since mid-2008 when the very stability of the national and global financial markets were shattered, leasing activity slowed but did not stop. Any commercial broker working in this market can attest to this. I would expect vacancy rates to continue to inch up and possibly jump up until users regain confidence in economic stability and increased spending habits of the general public.  I believe the recent rise in the financial indexes, along with various other positive news, indicates an improved economy within the next six months or so. By the way, we have now been in this current recession for the past 16 months and an additional 3-6 months will make this downturn one of the longest recessions over the past several decades.

If the next six months brings about improved economic activity, which I believe it will, the regional commercial real estate market will gain strength very quickly as there won’t be significant amounts of vacant office space to fill as in previous recessions.

Now is the time to act. The next six months will be the ideal time for tenants to either move to new space or renegotiate a new lease where they lease now and enter into a longer term lease as I believe rents are sure to move considerably higher over the next few years. This is one of the best opportunities to lock in a long term lease at what will be considered to be well below market for the term of the lease.

Working with an experienced commercial tenant rep will help fund the right space at a very competitive rate which will become more and more below market each year of your lease term.   

The Hastings Report by David P. Fugitt, SIOR, Senior Vice President, John D. Hastings, Inc.

John D. Hastings, Inc. commercial real estate of Westport announces the following recent lease transactions:

David Fugitt, SIOR announces the recent leasing of office space at 19 Ludlow Road in Westport. Communico, Ltd., a fulfillment company, has leased 2,810 square feet. Bob Lewis of Vidal Wettenstein represented the Tenant and Fugitt represented the Landlord, Old Hill Offices LLC in the transaction.  

Dave Fugitt also has leased flex space at 21 Lois Street in Norwalk. Fugitt was the sole agent in leasing 2,000 square feet to Sugar and Olives, a cooking oriented business. They will be opening soon after construction is completed.

David P. Fugitt, SIOR, Senior Vice President of John D. Hastings, Inc. commercial real estate of Westport is pleased to announce the recent sale of investment property. Fugitt represented Rende, LLC in the purchase of 2175 Dixwell Avenue, Hamden, Connecticut.

The 10,930 square foot building on approximately 1.6 acres has a new long term lease to Rite Aid Pharmacy. The purchase price was $3,050,000.

There is no hiding from the challenges and issues presented by the severe economic downturn beginning in mid-2008. Businesses are having difficulty obtaining financing to keep them able to operate and many individuals are experiencing the same problem.

With businesses laying off considerable numbers of employees, they do not need as much space which initially creates an increasing amount of sub-let space and later on additional direct availabilities.

However, times like these present opportunity. Market office rents from what I have been experiencing have fallen since early 2008. This is a fantastic time for companies to relocate to less expensive and possibly better space with more flexible terms. I recommend to tenant clients to look for a longer term lease reflecting this lower market pricing rather than short term so their rents won’t go back to much higher rates when the economy and the office market rebounds.

Commercial rents have certainly softened but, so far, it has not been as devastating as the real estate market of the late 1980’s to early 1990’s. when market rental rates plunged approximately 25%-30%. This was in part due to a very high vacancy rate created by significant “spec” development during the mid 1980s. When the economy softened and demand lightened we were left with far too much product which brought on a precipitous fall in market rental rates as well as property values. This time around the vacancy rate began at a relative low level so the supply is not nearly as high as before.

Therefore, if it is any consolation, that horrific real estate market rebounded and continued to do well and expand for years. This market will rebound too.

David P. Fugitt, SIOR
Senior Vice President

The beginning stage of a downward cycle includes the increase of sub-lease space while directly offered space appears to be strong due to companies being responsible for leases with a defined term so if their need for space declines they may decide to sub-lease all or part of their space. As leases run out without a tenant’s lease renewal, the direct vacancy rate will begin to grow as well.

The direct vacancy rate shown above is consistent with other published reports, however, the amount of available sub-let space indicates much less. My research found a total of 48,220,000 square feet of building area in the ten towns and cities analyzed. Of that, current available sub-let space totals 429,000 square feet or 1.1%. Some other recent reports state approximately 12% to 13% total less direct offering indicates about 5% sub-let space available which translates into 2,400,000 square feet for sub-lease in only ten towns and cities in lower Fairfield County. This seems abnormally high. Although I don’t believe vacancy rates will become nearly as high as in the late 1980’s, which approached 30%, sub-lease space will most likely continue to increase. The point being that prior to the late 80’s economic downturn there had been a significant amount of speculative office development financed by very loose commercial lending policies, much less structured than in more recent years.

Retail in lower Fairfield County continued to be strong and has historically fared well even through past recessions. The vacancy rate is less, at 4.8%, than one year ago which was at 5.3%, although up 0.2% from the end of last year. The vacancy rate for retail rarely exceeds 5% in this market, also, the average asking rental rate increased from $31.55/S.F. to $37.45/S.F. since the end of 2007. This comes from the extraordinary demographics in this market.

We at HASTINGS look forward to the opportunity to be of service to you and your company. John D. Hastings, Inc., established in 1948, is a commercial real estate firm specializing in commercial leasing, investment sales and appraisals serving lower Fairfield County.

The Hastings Report August 2008

David P. Fugitt, SIOR, Senior Vice President

Two leases have recently been signed at 830 Post Road East in Westport. The leases were to Larew Associates with 1,244 square feet and 97 Washington Street Associates with 830 square feet. Joanne Williams of Hastings Real Estate in Wilton represented Larew Associates and Bob Miller of Prudential Connecticut Commercial Real Estate represented 97 Washington Street. Fugitt, as exclusive leasing agent, represented the landlord in both of these leases.

China Cares Foundation has leased 1,510 square feet of office space at One Morningside Drive North in Westport. Fugitt represented the landlord and D.J. Smith of Rand Real Estate represented China Care in this transaction.

Wilton has always been known for the quality of its teachers, and recently recognized by Time Magazine in an article by a Wilton High School graduate who noted the impact two Wilton High School teachers had on her life.

The two teachers, Dr. E. Dan Cappel and Ms. Vernon Hastings, taught science and English, respectively at the high school.  Claudia Wallis, an editor with Time and a member of the class 1972, wrote about them in “How to make Great Teachers in the Feb. 25 issue.

Wilton Connecticut Town Profile