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News release

STAMFORD, CT

Fairfield County Leasing Activity Cools at Midyear 2015

JLL reports reduced deal velocity drives up overall vacancy rates


STAMFORD, CONN., August 3, 2015 — Overall vacancy rates in the second quarter of 2015 reached the highest level Fairfield County has seen in the past 10 years, according to JLL. The county’s overall rate rose to 23.3 percent this quarter, just surpassing the previous high of 23.2 percent witnessed in the second quarter of 2005.

Year-over-year, Fairfield County’s overall vacancy rate rose to 23.3 percent in the second quarter of 2015, an increase of 5.9 percent (or 1.3 percentage points) from 22.0 percent. Year-over-year, the county’s Class A vacancy rate grew to 22.7 percent, an increase of 6.6 percent (or 1.4 percentage points) from 21.3 percent.

“Since the beginning of the year, Fairfield County’s unemployment rate has dropped significantly, which is even more impressive when you take into account that some of the largest companies made significant employment cuts,” said Edward Tonnessen, Managing Director, with JLL’s CT/Westchester office. “The continued march towards pre-recession levels of unemployment has brought with it increased touring activity, especially along the major transit hubs of Stamford and Greenwich. The number of tenants looking for space in those markets rose 13.0 percent since 2013.“

Lackluster leasing activity and additional available office space added to the inventory brought a halt to the momentum the county enjoyed coming out of the first quarter. Leasing velocity in Fairfield County totaled 754,561 square feet in the second quarter, a 19.7 percent decrease from the 939,892 square feet recorded the previous quarter. UBS completed the biggest transaction of the quarter, taking 119,215 square feet at 600 Washington Boulevard in Stamford (Stamford CBD/Railroad). Other large leases included Strategic Value Partners, LLC signing for 28,398 square feet at 100 West Putnam Avenue in Greenwich (Greenwich CBD/Railroad) and Sikorsky Aircraft Corp. leasing 23,195 square feet at One Far Mill Crossing in Shelton (Route 8/Shelton).

Fairfield County recorded 714,910 square feet of negative absorption in the second quarter of 2015. The Norwalk/I-95 submarket claimed much of the negative absorption, due to the return of 430,000 square feet of office space at 10 Norden Place in Norwalk to the market after Northrop Grumman Corp. vacated the building.

A few of the suburban submarkets, including Route 8/Shelton and the Route 7 Corridor, garnered enough tenant interest this quarter to post positive absorption. Route 8/Shelton claimed 12.0 percent of all Fairfield County leasing activity in the second quarter, resulting in 85,490 square feet of positive absorption. Sikorsky Aircraft recorded the submarket’s largest deal with its expansion at 1 Far Mill Crossing. Sustained activity along the Route 7 Corridor, particularly at Merritt 7, generated 159,845 square feet of positive absorption. The largest deal of the quarter in the submarket was Wilton RE Ltd.’s lease of 21,480 square feet of space at 20 Glover Avenue in Norwalk. The Route 7 Corridor accounted for 8.7 percent of all completed deals in the county this quarter, driving Class A vacancy rates down to 12.1 percent, marking a historic low for the Route 7 Corridor.

The slowdown in leasing and rising vacancy rates drove down average asking rental rates throughout Fairfield County at mid-year 2015. Year-over-year, overall rents in Fairfield County fell to $31.20 per square foot in the second quarter, a decrease of 5.1 percent from $32.87 per square foot. Year-over-year, the county’s Class A rents dropped to $34.81 per square foot this quarter, a decrease of 4.1 percent from $36.29 per square foot.

Stamford CBD/Railroad
Leasing velocity in the Stamford CBD/Railroad submarket totaled in excess of 200,000 square feet in the second quarter, the most of any submarket in the county. UBS’s lease at 600 Washington Boulevard in Stamford accounted for more than half of that amount. Despite the strong interest from tenants, the area recorded 179,630 in negative absorption and continues to struggle with more than 26 large blocks of contiguous office space of 50,000 square feet or larger.

Year-over-year, the Stamford CBD/Railroad’s overall vacancy rate rose to 28.3 percent in the second quarter, an increase of 12.3 percent (or 3.1 percentage points) from 25.2 percent. Year-over-year, the submarket’s Class A vacancy rate grew to 28.5 percent this quarter, an increase of 12.2 percent (or 3.1 percentage points) from 25.4 percent.

Year-over-year, overall rents in the Stamford CBD/Railroad fell to $45.07 per square foot in the second quarter, a decrease of 3.2 percent from $46.56 per square foot. Year-over-year, the county’s Class A rents dropped to $45.80 per square foot this quarter, a decrease of 3.2 percent from $47.31 per square foot.

Greenwich CBD/Railroad
The Greenwich CBD/Railroad submarket remained one of Fairfield County’s strongest areas in terms of leasing activity and absorption in the second quarter of 2015. The area accounted for approximately 11.1 percent of all leases completed this quarter and posted 52,987 square feet in positive absorption. Strategic Value Partners’ lease at 100 West Putnam Avenue in Greenwich was the largest deal of the quarter in the submarket.

The steady volume of deals continued to push down vacancy rates throughout the submarket. Year-over-year, the overall vacancy rate for the Greenwich CBD/Railroad area fell to 16.6 percent in the second quarter, a decrease of 14.9 percent (or 2.9 percentage points) from 19.5 percent. Year-over-year, the submarket’s Class A vacancy rate dropped to 18.1 percent this quarter, a decrease of 20.6 percent (or 4.7 percentage points) from 22.8 percent.

Year-over-year, overall rents in the Greenwich CBD/Railroad fell to $81.26 per square foot in the second quarter of 2015, a decrease of 1.6 percent from $82.60 per square foot. Year-over-year, the county’s Class A rents rose to $89.20 per square foot this quarter, an increase of 3.6 percent from $86.12 per square foot.
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JLL is a leader in the New York tri-state commercial real estate market, with more than 2,000 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 investment sales transactions valued at more than $5.4 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. A Fortune 500 company 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 $56.0 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.