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News release

STAMFORD, CT

Fairfield County Sees Slowdown in Leasing in 3rd quarter of 2014

Survey of businesses point to increased optimism for new growth in next 12 months


STAMFORD, CT, October 28, 2014 — JLL reported that leasing activity slowed by approximately 20 percent in the third quarter of 2014 in Fairfield County, Conn., compared with the record-setting volume seen at midyear. However, a recent survey of Fairfield County businesses demonstrated that most businesses predict growth for their firms in the next year.

“Despite a decrease in leasing activity from the previous quarter, market indicators have remained positive,” said Robert Ageloff, managing director and head of JLL’s CT/Westchester office. “In the 2014 Fairfield County Business Climate Survey from early this year, executives at approximately 70 percent of county businesses noted their firms predict growth in the next 12 months compared to only 18 percent in 2011. We are also seeing that with the exception of the financial services and the larger law firms, more companies are hiring and evaluating taking on more space."

Leasing activity in Fairfield County was down about 20 percent, with tenants completing approximately 675,000 square feet in transactions in the third quarter of 2014 compared with 863,146 square feet in the previous quarter. Year-to-date leasing activity has reached about 2.4 million square feet. The financial services industry drove activity in the third quarter in terms of square footage leased, particularly in the Greenwich CBD/Railroad market, including Goldman Sachs’ 124,349-square-foot renewal at 1 American Lane and Catterton’s 50,449-square-foot renewal at 51 Weaver Street and 25,500-square-foot expansion at 599 West Putnam Avenue.

Fairfield County’s overall vacancy rate fell to 21.7 percent in the third quarter of 2014, a decrease of 5.2 percent (or 1.2 percentage points) from 22.9 percent one year earlier. The county’s Class A vacancy rate dropped to 21.0 percent this quarter, a decrease of 6.3 percent (or 1.4 percentage points) from 22.4 percent in the third quarter of 2013.

Overall average asking rents fell to $33.39 per square foot in the third quarter of 2014, a decrease of 2.1 percent from $34.11 per square foot one year earlier. Rates for the county’s Class A properties dropped to $36.85 per square foot this quarter, a decrease of 4.8 percent from $38.70 per square foot in the third quarter of 2013.

Stamford CBD/Railroad
The Stamford CBD/Railroad submarket remained the most sought-after area in Fairfield County. Businesses combing the submarket for space have requirements totaling in excess of one million square feet. Despite accounting for the vast majority of space requirements, the Stamford CBD/Railroad submarket posted 43,995 square feet of negative absorption in the third quarter but year-to-date absorption remains positive at more than 140,000 square feet. Absorption should trend higher in the future as some of the tenants looking for space start signing deals.

The submarket’s overall vacancy rate remained unchanged at 25.7 percent in the third quarter of 2014. The Class A vacancy rate dropped to 25.9 percent this quarter, a decrease of 1.1 percent (or 0.3 percentage points) from 26.2 percent in the third quarter of 2013.

Overall average asking rents in the Stamford CBD/Railroad submarket fell to $45.99 per square foot in the third quarter of 2014, a decrease of 4.5 percent from $48.17 per square foot one year earlier. Rates for the submarket’s Class A product dropped to $46.77 per square this quarter, a decrease of 4.1 percent from $48.75 per square foot in the third quarter of 2013.

Greenwich CBD/Railroad
The Greenwich CBD/Railroad submarket continued to struggle with lackluster demand in the third quarter, due in part to a lack of lease expirations among the major hedge funds and financial services firms, many of which made new commitments during the recession to capitalize on lower rents. Although Goldman Sachs and Catterton both completed transactions in the submarket this quarter, two of the three leases signed were renewals. Global food company Mars Inc. inked one of the largest new deals in the Greenwich CBD/Railroad submarket in the third quarter, taking 17,300 square feet at 124-130 Mason Street.

The overall vacancy rate in the Greenwich CBD/Railroad submarket fell to 18.3 percent in the third quarter of 2014, a decrease of 25.6 percent (or 6.3 percentage points) from 24.6 percent one year earlier. The submarket’s Class A vacancy rate dropped to 20.7 percent this quarter, a decrease of 27.6 percent (or 7.9 percentage points) from 28.6 percent in the third quarter of 2013.

The submarket continued to see declines in average asking rent due to the availability of cheaper sublease space options. Overall average asking rental rates in the Greenwich CBD/Railroad submarket fell to $80.26 per square foot in the third quarter of 2014, a decrease of 6.6 percent from $85.96 per square foot one year ago. Rates for the submarket’s Class A product dropped to $84.37 per square foot this quarter, a decrease of 5.5 percent from $89.24 per square foot in the third 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 $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $50.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.