By Cara Baruzzi, Register Business Editor
cbaruzzi@nhregister.com / Twitter: @carabaruzzi

New Haven’s office real estate market held relatively steady in the third quarter, with nonprofits and startups filling some of the space being vacated by large corporations, according to data released this week.

The vacancy rate among office space in the city was 12.2 percent, up slightly from 11.5 percent in the third quarter of 2010, but “fairly healthy” in light of the weak economy, said John Keogh, senior broker at Colliers International in New Haven.

Colliers’ quarterly report tracks occupancy and vacancy rates in 57 office buildings in the city.

“There was an unusual amount of leasing done,” Keogh said, and the greater-than-normal amount of activity helped steady the market. “Even with the ongoing defection that we have from corporations, the vacancy rate is not slipping much.”

Several of New Haven’s large office tenants are downsizing their space, including Yhe United Illuminating Co., which is preparing to relocate its headquarters from 157 Church St. to Orange next year. UI leases about 200,000 square feet of space in the building, Keogh said, and will continue to lease about 40,000 or 50,000 once the headquarters relocates.

Other large companies, including AT&T Inc. and First Niagara Financial Group, also are scaling back their administrative functions in the city, Keogh said.

Other tenants are filling some of the void. In the largest third-quarter lease, for example, the Connecticut Center for Arts and Technology occupied 15,000 square feet at 4 Science Park that had been vacant for two years, according to Keogh’s report.

A medical outsourcing service called Precipio Diagnostics will occupy 7,500 square feet in that building also.

Last quarter “emphasizes that New Haven’s economic drivers are health care, education, and high-tech and biotech,” said Barbara Pearce, president of H. Pearce Real Estate. “Those three sectors have been particularly strong relative to traditional industries during this downturn, and looks as though they are poised to continue their growth.”

Chris Nicotra, managing principal of Olympia Properties, said he is seeing strong demand from tenants, but mainly those seeking less than 2,000-square-feet spaces. Continued...

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“A lot of it is tenants relocating from one space within the city to another space,” he said, adding tenants are drawn to sites where they can strike favorable deals with landlords.

Call Cara Baruzzi at 203-789-5748 or follow her on Twitter @CaraBaruzzi.

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