Business & Tech

Fairfield County Office Market Shows Signs Of Improvement

"The decline in vacancy was seen in most submarkets, with the exception of the Greenwich suburbs."

(Image via Shutterstock)

From Avison Young: Falling unemployment and the addition of nearly 2,000 new jobs in Fairfield County metropolitan areas has led to visible signs of improvement in the Fairfield County office market.

Fairfield County saw decreased overall vacancy, positive net absorption, and an increased average asking rent for Class A office year-to-date in most submarkets, according to statistics compiled by Avison Young. The commercial real estate firm’s Fairfield County office is based in Norwalk.

Vacancy dipped in the second quarter to 16.3 percent, a 500 basis-point (bps) decrease since the first quarter and a 1,500-bps decline since the second quarter of 2017. The decline in vacancy was seen in most submarkets, with the exception of the Greenwich suburbs.

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The lowest vacancy was recorded in the Northern submarket, where a few of the largest lease deals this year have been consummated. Among them is the lease of 40,000 square feet at Old Ridgebury Road in Danbury by Somers Orthopedic, a New York-based health care provider. FactSet’s relocation of its Norwalk headquarters from Merritt 7 to 45 Glover Street also figured prominently in the new lease transactions during the first half of 2018.

Stamford, both downtown and in the suburban areas, maintains the highest vacancy rate, an estimated 22.4 percent. That figure is a decrease from previous years. A few large office buildings in Greenwich also have high vacancy rates. 1 American Lane, for instance, has over 160,000 square feet of vacant office space.

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Asking rates for Class A office space increased 5.7 percent year over year, continuing an upward trend that began in 2017. Overall, the asking rate for all space fell 2.5 percent. Class B office space saw a 10.0 percent decline in asking rates year-over-year. The average asking rate in Fairfield County is $35.39 per square foot. Total net absorption was 131,043 square feet and showed moderate growth for the first time since 2014.

Several factors are fueling the improved outlook in the office space market. The unemployment rate has fallen to 4.1 percent, and 2,000 jobs have been added in the Bridgeport-Stamford-Norwalk and Danbury metropolitan areas since June 2017. About 900 of the of those new jobs are in the finance sector.

Some trends to watch over the next few months include the continued absorption of office space by the healthcare sector, as providers continue to expand across state borders; the continued commitment of financial firms to invest in Fairfield County, as witnessed by Bank of America’s decision to lease 115,000 square feet at 600 Washington Blvd. in Stamford earlier this year; and the movement toward downtown. KPMG recently signed a long-term lease to relocate from 3001 Summer St. in Stamford to 677 Washington Blvd., a 6-minute walk from the train station, as businesses show an increasing preference for transit-oriented locations.

Avison Young is one of the world’s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 2,600 real estate professionals in 84 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family and hospitality properties.

Image via Shutterstock


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