Quality Office Space in Prime Fairfield County Submarkets Attracts Major Tenants

According to CBRE Group’s Q2 2016 Office Market Reports, transactions smaller than 10,000 square feet continued to drive activity throughout Westchester County, while Fairfield County experienced a plethora on new leases by major offices users specifically for quality space in recently renovated Class A properties. The industry-leading market analysis showed that nearly 85 percent of the leasing velocity in Westchester County during the second quarter was attributed to smaller tenants signing new lease deals. As a result, the market recorded 329,636 square feet of total leasing – a 25.7 percent decrease from the leasing velocity posted at the same time last year.

Despite the lower leasing activity, these smaller space users helped four of Westchester’s five submarkets record positive net absorption. The only sector that posted a negative absorption rate was Westchester North, where IBM returned 900,000 square feet of office space. As a result, Westchester County’s availability rate of 24 percent is the highest in over a decade. However, there is light at the end of the tunnel with a number of anticipated major commitments by office space users in White Plains CBD. These upcoming deals will significantly tighten the overall supply in the White Plains submarket and also help boost the county as a whole.

The White Plains CBD saw average asking rents reach $31.15 per-square-foot, thanks to its prime, Class A office space availabilities. This market’s continued strength helped the entire market reach six-year highs in average asking rents, which closed the second quarter at $27.56 per-square-foot.

According to CBRE’s Fairfield County Office Report, leasing activity throughout Fairfield bounced back with a vengeance when compared to the first quarter. In fact, the average transaction size more than doubled as several major office tenants committed to office space in the market. Two perfect examples are Charter Communications’ expansion at 400 Atlantic Street in Stamford, and Wells Fargo’s relocation to 83 Wooster Heights Road in Danbury. 

A noteworthy trend evident throughout Fairfield County is office space users’ focus on quality office space in prime office markets – a trend seen in suburban markets across the country. Stamford CBD, Greenwich CBD and Central Fairfield experienced the majority of the leasing activity accounting for 64.8 percent of the market’s overall leasing. As a result, these submarkets posted a combined availability rate of 17.4 percent – 310 basis points below that of the entire county.

Most of the leasing activity took place in areas/neighborhoods offering a unique employee experience, with amenities and conveniences that modern (TAMI) occupiers demand. In order to attract these space users, owners in centrally located submarkets are investing significant capital to further enhance their office properties. For example, 800 Connecticut Avenue,50 Washington Street and Merritt 7 have all undergone recent capital improvements and as a resulthave experienced significant leasing activity.

While leasing activity remained strong, several consolidations and exists from Fairfield by a number of corporations resulted in the market posting negative net absorption of 266,115 square feet by the end of the second quarter. Despite the large blocks of space hitting the market (246,884 square feet at 45 Glover Avenue in Norwalk, and 196,898 square feet at 39 Old Ridgebury Road in Danbury) the availability rate for Fairfield remained stable from the same time last quarter at 20.5 percent.

Average asking rents in Fairfield County of $34.82 per-square-foot represented a slow decline of the lowest asking rent since the $34.18 per-square-foot posted in 2011.

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.