Vacancy remains high in the 11.8-million-square-foot metro New Haven general purpose, multi-tenant office market, with net absorption going to new buildings. In the first quarter, therefore, the completion of the 127,000-square-foot United Illuminating Headquarters in west suburban Orange was matched by 127,000 square feet of positive net absorption. But with no new supply in the second quarter net absorption was close to zero and the vacancy rate remained at 17.8%. There was no change in the third quarter either, according to preliminary data.
This has already been a big year for new supply despite high vacancy, as the 140,000-square-foot Tract A at Science Park in the city of New Haven was finished in January, and the 76,540-square-foot 458 Grand Avenue is under construction with an expected completion in November. Reis predicts a near correspondence of new supply and net demand during all of 2012. The vacancy rate is expected to end the year at 17.5%, with the decrease accounted for by inventory contraction among existing buildings. Not until a predicted surge of net absorption starting in 2015 are those existing buildings expected to see improved occupancy, as the vacancy rate finally begins to fall.
Rents are basically flat. In the second quarter both the average asking rent and the average effective rent increased 0.3%, to $20.60 psf and $16.64 psf, respectively, bringing the year-over-year gain to 0.1% by both measures. Preliminary data show no change in the asking rent during the third quarter, and August data has shown no increase in the effective rent through that month. Yet gains of 1.2% by both measures are forecast for all of 2012, followed by stronger gains in subsequent years.
Cushman & Wakefield reports a 15.1% overall vacancy rate and an overall weighted lease rate of $20.44 psf.