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News release

STAMFORD, CO

Fairfield County Witnesses 27% Boost in Deal Velocity in 1st-Quarter 2015

Suburban markets claim three biggest deals signed so far this year; big blocks of available space slow Stamford CBD/Railroad submarket


STAMFORD, Conn., April 22, 2015 — JLL reported that Fairfield County witnessed a 27 percent increase in leasing activity in the first quarter of 2015. Most of the deal velocity came out of the county’s suburban markets, which accounted for half of the eight largest deals inked this quarter.

“The Fairfield County office market overall is struggling to find a balance, as there remains great disparity among the various submarkets,” said Edward Tonnessen, Managing Director, with JLL’s CT/Westchester office. “While recent transactions and current demand point to continued improvement within the Greenwich CBD/Railroad submarket, at the same time, Stamford remains flat and challenged by the continued availability of large blocks of space. In the suburban markets, the Route 7 Corridor continues to strengthen, led by the repositioning of Merritt 7, while Route 8/Shelton is maintaining high occupancy levels despite little price appreciation.”

Fairfield County saw 939,892 square feet in leasing velocity in the first quarter of the year, a 27.0 percent increase from the 739,942 square feet signed at year-end 2014. The largest transactions signed this quarter included Synchrony Financial’s lease of 312,000 square feet at 777 Long Ridge Road in Stamford, the largest transaction the county has seen since 2013. In addition, Sikorsky Aircraft took 121,041 square feet at 1 Far Mill Crossing in Shelton and Frontier Communications leased 84,504 square feet at 401 Merritt 7 in Norwalk. The majority of the deals signed this quarter ranged from 3,000 square feet to 8,000 square feet, a consistent trend for the county over the past few years.

Despite the healthy increase in leasing activity, Fairfield County recorded negative absorption in the first quarter of 2015. Large amounts of available space were added to the market this quarter at 83 Wooster Heights in Danbury, 99 Hawley Land in Stratford and 3 High Ridge Park in Stamford. Tenants vacated large amounts of space at each building, mitigating the positive momentum of the strong leasing velocity.

Fairfield County’s suburban markets claimed the lion’s share of the largest deals signed in the first quarter of the year. Sikorsky Aircraft’s expansion at 1 Far Mill Crossing helped fuel 114,896 square feet of positive absorption in the Route 8/Shelton submarket, pushing overall vacancy rates there down to 19.8 percent. Frontier Communications’ new lease at 401 Merritt 7 helped create 71,201 square feet of positive absorption for the Route 7 Corridor, dropping Class vacancy rates there to 13.7 percent — a new record for the submarket.

Fairfield County’s overall vacancy rate rose slightly to 22.1 percent in the first quarter of 2015 while the Class A vacancy rate declined to 21.3 percent.

Landlords have reduced average asking rents throughout Fairfield County, fueling much of the decrease in rates seen this quarter. Building owners began lowering asking rents in an effort to fill properties that have lain vacant since 2013. Overall average asking rents fell to $31.50 per square foot in the first quarter of 2015, a decrease of 8.9 percent from $34.57 per square foot one year earlier. Rates for the county’s Class A properties dropped to $35.17 per square foot this quarter, a decrease of 6.7 percent from $37.71 per square foot in the first quarter of 2014.

Stamford CBD/Railroad
Large amounts of unoccupied office space remained a challenge for the Stamford CBD/Railroad submarket, which continued to struggle with more than 22 blocks of contiguous office space 25,000 square feet or larger. That number is expected to increase due to ongoing job cuts by UBS Financial Services Inc. and the Royal Bank of Scotland. Stamford is not alone in this struggle, however, as large blocks of available space have an even greater impact on smaller markets such as Norwalk where the vacancy rate has reached nearly 30.0 percent. These spaces in Stamford could remain vacant for a prolonged period of time, as the blocks are not readily adaptable to tenant requirements currently driving the market: 85.0 percent of leasing activity in Stamford this quarter came from deals below 8,000 square feet.

A significant decrease in touring activity in the Stamford CBD towards the end of 2014 carried over into the beginning of this year. Tenants are choosing the more affordable areas north of the city despite its proximity to amenities and transit. As a result, the submarket’s overall vacancy rate rose to 26.5 percent in the first quarter of 2015, an increase of 7.7 percent (or 1.9 percentage points) from 24.6 percent one year earlier. The Class A vacancy rate grew to 26.5 percent this quarter, an increase of 6.4 percent (or 1.6 percentage points) from 24.9 percent in the first quarter of 2014. 

Greenwich CBD/Railroad
The Greenwich CBD/Railroad submarket was one of Fairfield County’s strongest areas in terms of leasing activity and absorption in the first quarter of 2015. The submarket remains a steady draw for financial services firms, which inked seven out of the eight transactions signed this quarter, including AMG Funds LLC’s 40,000 square feet and Security Benefit Corp.’s 20,000 square feet at 600 Steamboat Road.

Overall average asking rental rates in the Greenwich CBD/Railroad submarket fell to $81.51 per square foot in the first quarter of 2015, a decrease of 3.1 percent from $84.10 per square foot one year ago. Rates for the submarket’s Class A product rose slightly to $87.89 per square foot this quarter, an increase of less than 1.0 percent from $87.44 in the first quarter of 2014.

The strong leasing activity throughout the submarket fuelled a significant decrease in overall and Class A vacancy rates. The overall vacancy rate in the Greenwich CBD/Railroad submarket plummeted to 15.8 percent in the first quarter of 2015, a decrease of 23.3 percent (or 4.8 percentage points) from 20.6 percent one year earlier. The submarket’s Class A vacancy rate tumbled to 17.5 percent this quarter, a decrease of 27.7 percent (or 6.7 percentage points) from 24.2 percent in the first quarter of 2014.

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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 2014, the New York tri-state team completed approximately 22.8 million square feet of lease transactions, arranged capital markets transactions valued at more than $3.0 billion, managed projects valued at $7.6 billion, and oversaw a property management, facilities management and agency leasing portfolio exceeding 163 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 $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $53.6 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.