The $97.8 million sale of 55 Railroad Ave. in Greenwich was among the highlights for Fairfield County’s commercial real estate market in the fourth quarter of 2004.

Commercial brokers have been touting a stronger market for a while, but numbers at the end of the fourth quarter in Fairfield County finally reflected solid improvement in commercial real estate.

Jim Fagan, senior managing director for the Fairfield and Westchester counties region of Cushman & Wakefield, said the news has been long awaited.

“For a long time after the collapse of the market in 2001, people were wishing the market would get better,” said Fagan.

Since 2001, there have been bright spots in Fairfield County’s market, but they haven’t formed definite trends. But statistics recently published by commercial real estate companies support an upward trend.

Availability fell to pre-Sept. 11, 2001, levels with 7.3 million square feet available, according to a year-end report from CB Richard Ellis. That number doesn’t compare to the 4 million square feet of available space seen at the end of 2000, but if absorption continues at the pace set in 2004, that low level of available space could become a reality again.

The overall vacancy rate of office buildings in the county dropped to 18.1 percent at the end of the fourth quarter from 18.5 percent at the beginning of the year, according to Cushman & Wakefield. The direct vacancy rate increased from 12.7 percent at the beginning of the year to 12.8 percent at the end of the fourth quarter.

Last year’s improved economy encouraged corporate confidence, employment stability and forward planning, according to CB Richard Ellis. The fourth quarter was punctuated by accomplishments such as the complete leasing of 800 Connecticut Ave. in Norwalk, where many small companies took up residence in 2004, according to Fagan. Companies leased more than 100,000 square feet of space there in 12 months, he said.

More developers also started planning or developing new build-to-suit or speculative construction in cities like Norwalk, near the Merritt Parkway and Route 7 – lately a hotspot for building and leasing, according to Fagan.

Norwalk deserves much of the credit for the county’s improving statistics, according to CB Richard Ellis. Landlords and developers were aggressive in motivating tenants to make commitments at a rate similar to the high-technology boom in the late 1990s. Leasing in the central portion of the county – including Norwalk – rose 6 percent from 2003 to nearly 1.3 million square feet in 2004.

“The big winner for the fourth quarter and the year was Norwalk,” said CB Richard Ellis Senior Vice President Al Mirin.

The city gained big tenants like Diageo PLC, FactSet Research Systems, Interpublic Group and GE Commercial Finance. A new building, 901 Main Ave., a 360,000-square-foot office building next to Diageo’s headquarters, should be complete in 2006.

‘Impressive Interest’

The fourth quarter was capped off by several large sales, like the record-breaking sale of 55 Railroad Ave. in Greenwich. Willrich Holdings, a partnership of the Willett Cos. in Rye, N.Y., and Warren & Partners in Dublin, Ireland, bought the 131,630-square-foot office building for $97.8 million, or $743 per square foot, in late December.

The per-square-foot price was a record for a trophy property in the city and will likely change property owners’ views on pricing in the future, according to the broker who represented the building’s seller and procured the buyer.

“For any property owner [especially those in Greenwich], they will take notice of this sale,” said Jeffrey R. Dunne of CB Richard Ellis’ Tri-State Investment Team earlier this month. “It just changes people’s thinking of what things are worth.”

Greenwich also deserves some of the credit for the county’s positive numbers at the end of the fourth quarter.

“Greenwich, still riding the tide of financial service and hedge fund obsession with address cache, also played a major role in Fairfield’s improvement in 2004 as even secondary properties saw impressive interest,” according to CB Richard Ellis.

Leasing in Greenwich jumped 15 percent from 2003 to 505,580 square feet, or 15 percent of Fairfield County’s annual total, last year.

In Stamford, the central business district came out of its slump, with its overall office vacancy rate dropping from 18.6 percent to 16 percent over the last year, according to Cushman & Wakefield. That was largely due to companies subleasing space there, Fagan said.

“The amount of sublease space in the market ended up acting as a double-edged sword in Fairfield County,” he said. “Extensive sublease activity took place in the Stamford CBD, while Greenwich, inundated with sublease space, ended up with negative absorption.”

Sublease space previously had only been hurting the Fairfield County market, according to Mirin.

Stamford’s CBD exhibited some of the strongest market fundamentals in the county, according to Cushman & Wakefield. It posed 104,835 square feet of positive absorption and the largest drop in overall vacancy rate.

But Stamford as a whole continued to lose big tenants over the last year, Mirin said. Overall vacancy rates stayed consistent from the fourth quarter of 2003 to the fourth quarter of 2004, but the city saw a midyear dip in vacancy rates. In the third quarter of 2004, the overall vacancy rate in Stamford, non-central business district, was 15.9 percent. It went up to 18.2 percent in the fourth quarter, according to statistics from Cushman & Wakefield.

But the fact that the market rebounded to levels not seen since before Sept. 11, 2001, with higher absorption throughout the county and lower vacancy rates, is encouraging to brokers.

“I think the momentum from the fourth quarter will carry through to the first quarter [of 2005],” Mirin said.