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News release

STAMFORD, CT

Fairfield County Sees Highest Midyear Leasing Volume Since 2010

Overall vacancy rates fall across county at midyear 2014, rent growth tapers off due to availability of sublease options


​STAMFORD, CT, July 31, 2014 — JLL reported that relocations and new leases accounted for more than half of all transactions signed and half the total square-footage volume in Fairfield County in the second quarter of 2014. Leasing activity should remain stable for the remainder of the year, as space users with approximately 2.3 million square feet in requirements are scouring the county for space.

“A surge of buildings on the market and ongoing distressed note sales have introduced new players into Fairfield County's real estate sector,” said Robert Ageloff, managing director and head of JLL’s CT/Westchester office. “These investors are acquiring buildings with rent and concession underwriting that will keep asking rents high in the short term. We expect to see more market-reflective asking rents, concessions and net effective rents once these new owners’ expectations adjust to the actual level of demand.”

Tenants committed to approximately 850,000 square feet in transactions in the second quarter of 2014, bringing total year-to-date leasing volume to 1.6 million square feet, the highest midyear total seen in Fairfield County since 2010. Transaction activity was dominated by a health services and media tenants. In a market where leases larger than 100,000 square feet are rare, three big deals were signed so far this year, with two completed in the second quarter. United Healthcare Group leased 107,688 square feet at 4 Research Drive in the Route 8/Shelton submarket, and technology firm Datto Inc. expanded by 100,000 square feet at 101 Merritt 7 in the Route 7 Corridor. During the previous quarter, Deloitte LLP signed for 117,700 square feet at BLT Financial Center.

Fairfield County’s overall vacancy rate fell to 22 percent in the second quarter of 2014, a decrease of 3.1 percent (or 0.7 percentage points) from 22.7 percent one year earlier. The county’s Class A vacancy rate dropped to 21.3 percent this quarter, a decrease of 4.9 percent (or 1.1 percentage points) from 22.4 percent in the second quarter of 2013.

Overall average asking rents fell to $32.87 per square foot in the second quarter of 2014, a decrease of 1.2 percent from $33.26 per square foot one year earlier. Rates for the county’s Class A properties dropped to $36.29 per square foot this quarter, a decrease of 3.0 percent from $37.42 per square foot in the second quarter of 2013.

Stamford CBD/Railroad
Businesses continued to favor the Stamford CBD/Railroad submarket above other Fairfield County locations in the second quarter of 2014. Tenant space requirements grew to more than 1.0 million square feet at midyear 2014, up from slightly more than 800,000 square feet the previous quarter. The steady deal volume helped absorb some long-vacant blocks of space, fueling more than 250,000 square feet of positive net absorption for Stamford year-to-date.

Stamford recently hired a new economic development director, who will aim to further diversify the mix of industries in the area away from sectors that show consistent weakening. This effort will be crucial to ongoing improvement throughout the submarket.
The submarket’s overall vacancy rate declined to 25.2 percent in the second quarter of 2014, a decrease of 2.3 percent (or 0.6 percentage points) from 25.8 percent one year earlier. The Class A vacancy rate dropped to 25.4 percent this quarter, a decrease of 3.8 percent (or 1.0 percentage points) from 26.4 percent in the second quarter of 2013.

Overall average asking rents in the Stamford CBD/Railroad submarket rose to $46.56 per square foot in the second quarter of 2014, an increase of 1.0 percent from $46.12 per square foot one year earlier. Rates for the submarket’s Class A product grew to $47.31 per square by the end of June, an increase of 1.5 percent from $46.60 per square foot in the second quarter of 2013.

Greenwich CBD/Railroad
Greenwich CBD/Railroad submarket has struggled with lackluster demand for much of the year, due in part to a lack of lease expirations among the major hedge funds and financial services firms, many of which committed to new deals during the recession to capitalize on lower rents. In addition, the submarket struggled against competition from the Stamford CBD/Railroad submarket, which boasts quality office space at a $29.00 per square foot discount.

The overall vacancy rate in the Greenwich CBD/Railroad submarket to fall 9.3 percent (or 2.0 percentage points) to 19.5 percent in the second quarter of 2014 from 21.5 percent one year earlier. The submarket’s Class A vacancy rate dropped to 22.8 percent this quarter, a decrease of 4.6 percent (or 1.1 percentage points) from 23.9 percent in the second quarter of 2013.

The submarket saw growth in average asking rents taper off, weighed down by the availability of cheaper sublease space options. Overall average asking rental rates in the Greenwich CBD/Railroad submarket rose to $82.60 per square foot in the second quarter of 2014, an increase of less than 1.0 percent from $82.28 per square foot one year ago. Rates for the submarket’s Class A product dropped to $86.12 per square foot this quarter, a decrease of less than 1.0 percent from $86.86 per square foot in the second quarter of 2013.

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JLL is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and

project and development services. In 2013, the New York tri-state team completed approximately 25.9 million square feet in lease transactions, arranged capital markets transactions valued at $2.1 billion, managed projects valued at nearly $7.0 billion, and oversaw a property and facilities management portfolio of 95.3 million square feet and an agency leasing portfolio of 67.0 million square feet.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. JLL is the brand name of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.