While the Fairfield County office market experienced its most active first half of the year since 2015 – recording over 1 million square feet of leasing activity – there are still plenty of vacancies on the market, with observers cautiously optimistic that the recent momentum will continue.
Stamford and Greenwich led the way in the second quarter of 2018, with the former accounting for more than 34 percent of the 403,000 square feet that was leased in Fairfield County, according to Jared Koeck, research team lead at CBRE Stamford. The availability rate in Greenwich reached single digits for the first time in a decade, with Class-A availabilities at a low 8.2 percent and an overall availability rate of 9.1 percent as of September – “a number that is poised to dip even lower as we push closer toward the end of the year,” Koeck said.
Koeck further said that the continuing drop in availability in the Greenwich central business district (CBD) leads CBRE to believe that as available space in that submarket is leased, activity will spill into neighboring Stamford. That city is well positioned to absorb some of the tenants that could be locked out of Greenwich, he said. “The walkable submarket has ample Class-A space available at significantly more affordable rents, making it an attractive alternative.”
Several major financial, insurance and real estate (FIRE) tenants have relocated from Greenwich to Stamford lately, including First Reserve Corporation and PartnerRE.
Across the county, “Office occupancy has been fairly steady,” CBRE Vice Chairman Jeffrey Dunne said. Noting some of the company’s biggest deals in the county over the past
several months – including the $42 million sale of Park Square West, a mixed-use property in Stamford, in August; the $16.5 million sale of a two-building medical office complex in Stamford in October; and one of the county’s biggest deals of the year, the $17 million sale of Danbury’s Matrix Corporate Center, also in October – Dunne said CBRE is on pace to end 2018 with $600 million to $700 million in Fairfield County sales.
In general, the vacancy level is up across the county, said Sean Cahill, principal and managing director of Avison Young’s Fairfield/Westchester office. “The large spaces are what move the needle overall, but there is still space around Fairfield County,” he said.
With the state seemingly having turned the corner when it comes to jobs – the latest figures from the Connecticut Department of Labor show nonfarm jobs grew by 22,300, or 1.3 percent, through October, while the unemployment rate stands at 4.2, compared with 4.5 percent on a year-over-year basis – Cahill said sunny days should be ahead for the commercial market.
“The job creation that is going on will directly affect occupancy rates in Fairfield County, particularly in the office space,” he said. “We’re finally starting to see it turn around.”
The 10 largest available blocks of space in the county as of Nov. 1 are:
The aforementioned Matrix Corporate Center at 39 Old Ridgebury Road in Danbury, consisting of a total 1.2 million square feet, 750,000 square feet of which is available; the former UBS headquarters at 677 Washington Blvd. in Stamford, which sold last December for $33 million, consisting of 760,000 square feet, 608,744 of which is available; the former Northrop Grumman facility at 10 Norden Place in Norwalk, where 483,436 of its 620,642 square feet are available; the former Pitney Bowes location at 1 Elmcroft Road in Stamford, where 470,505 of its 550,000 square feet are available; and the Charter Communications building at 400 Atlantic St. in Stamford, from which it is moving in favor of a new 500,000-square-foot headquarters at 406 Washington Blvd. in Stamford; once that move takes place, 355,946 of the building’s 501,448 square feet will be available.
Rounding out the top 10 are: 20 Westport Road in Wilton, where 276,409 of its 341,207 square feet are available; the former GE Energy site at 800 Long Ridge Road in Stamford, where all 275,000 square feet are available; the 252,000-square-foot onetime United Health Group building at 48 Monroe Turnpike in Trumbull – which, it must be noted, is scheduled to be demolished after being bought in September for about $3.4 million in favor of a senior housing community; the former GE facility at 201 High Ridge Road in Stamford, where nearly all of its 196,000 square feet is available; and the former global headquarters of Factset at 601 Merritt 7 in Norwalk, where 192,312 of its 265,000 square feet are available after the company relocated to 45 Glover Ave. in March.
Interest in opening or relocating a business in the county is growing stronger, according to CBRE’s Koeck. “We are seeing an increase in interest from investors and a willingness of existing owners to reposition and improve their properties to meet the changing needs of the evolving workforce,” he said.