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News release

STAMFORD, CT

Fairfield County Leasing Activity Ramps Up in 3rd Quarter of 2015

JLL reports vacancy rate increases throughout county despite boost in deal velocity


STAMFORD, CONN., October 19, 2015 — Leasing velocity in Fairfield County increased by nearly 12 percent in the third quarter of 2015, according to JLL. Space users signed for 781,056 square feet of space this quarter, compared with 754,561 square feet the previous quarter.

Despite the boost in deal volume, vacancy rates for all building classes continued to climb in Fairfield County. Year-over-year, Fairfield County’s overall vacancy rate rose to 25.6 percent in the third quarter of 2015, an increase of 18.0 percent (or 3.9 percentage points) from 21.7 percent. Year-over-year, the county’s Class A vacancy rate grew to 25.7 percent, an increase of 22.4 percent (or 4.7 percentage points) from 21.0 percent.

“The Fairfield County office market presented a bit of a mixed bag this quarter,” said Edward Tonnessen, Managing Director, with JLL’s CT/Westchester office. “Central Greenwich has been steadily improving, resulting in sustained rental growth for the area.

Stamford, while active, continues to suffer from persistent space givebacks by some of its largest space users. The county’s suburban markets, led by the Route 7 and Route 8 Corridors, are relatively healthy by comparison."

Stamford claimed all four of the largest deals completed in Fairfield County this quarter. Fujifilm Medical Systems USA inked the biggest transaction, taking 88,000 square feet at 419 West Avenue in the Stamford South/I-95 submarket. Other large leases included Harman International Industries signing for 68,690 square feet at 400 Atlantic Street, UBS Financial Services Inc. taking 27,321 square feet at 750 Washington Boulevard, and World Wrestling Entertainment Inc. leasing 24,547 square feet at 1266 East Main Street, all located in the Stamford CBD/Railroad submarket.

Fairfield County recorded 1,124,152 square feet of negative absorption in the third quarter of 2015, a 57.2 percent increase compared with 714,910 square feet of negative absorption the previous quarter. The majority of the negative absorption this quarter was due to large amounts of space being returned to the market by large users, including the Royal Bank of Scotland PLC, UBS and Pitney Bowes Inc., throughout the Stamford CBD/Railroad and Stamford South/I-95 submarkets.

The average size of transactions in the Stamford CBD/Railroad submarket has decreased by 15.4 percent during the past year, dropping from 10,511 square feet to 8,893 square feet, which helps explain the significant amount of large, vacant blocks of space throughout Stamford. The Route 7 Corridor, with a direct vacancy rate of 10.3 percent, boasts the lowest vacancy rates in the county. Completed leases in this submarket were, on average, 24.0 percent larger than those signed in the Stamford CBD/Railroad area.

Continued lackluster leasing activity and rising vacancy rates, drove down average asking rental rates throughout Fairfield County this quarter. Year-over-year, the county’s overall rents fell to $31.80 per square foot in the third quarter of 2015, a decrease of 4.8 percent from $33.39 per square foot. Year-over-year, Class A rents dropped to $35.15 per square foot this quarter, a decrease of 4.6 percent from $36.85 per square foot.

Stamford CBD/Railroad
The Stamford CBD/Railroad submarket accounted for slightly more than 25 percent, or a total of 197,306 square feet, of all completed transactions in Fairfield County in the third quarter. Three of the four largest deals — Harman International Industries at 400 Atlantic Street, UBS Financial Services Inc. at 750 Washington Boulevard and the World Wrestling Entertainment Inc. at 1266 East Main Street — were signed in the submarket this quarter. Despite strong interest from tenants, the area recorded 488,594 square feet in negative absorption and has more than 26 large blocks of contiguous office space of 50,000 square feet or greater available.

Year-over-year, the Stamford CBD/Railroad’s overall vacancy rate rose to 34.5 percent in the third quarter, an increase of 34.2 percent (or 8.8 percentage points) from 25.7 percent. Year-over-year, the submarket’s Class A vacancy rate grew to 34.9 percent this quarter, an increase of 34.7 percent (or 9.0 percentage points) from 25.9 percent.

Year-over-year, overall rents in the Stamford CBD/Railroad fell to $44.54 per square foot in the third quarter, a decrease of 3.2 percent from $45.99 per square foot. Year-over-year, the county’s Class A rents dropped to $45.09 per square foot this quarter, a decrease of 3.6 percent from $46.77 per square foot.

Greenwich CBD/Railroad
There was little activity in the Greenwich CBD/Railroad submarket, typically one of Fairfield County’s strongest areas in terms of leasing activity and absorption, in the third quarter of 2015. The area accounted for about 4.6 percent of all transactions completed this quarter and posted 34,916 square feet in negative absorption. Starwood Capital Group LLC’s lease of 18,814 square feet at 51 Weaver Street in Greenwich was the largest deal of the quarter in the submarket.

Although the submarket posted moderate leasing activity this quarter, vacancy rates have continued to decline. Year-over-year, the overall vacancy rate for the Greenwich CBD/Railroad area fell slightly to 18.2 percent, a decrease of less than 1.0 percent (or 0.1 percentage points) from 18.3 percent. Year-over-year, the submarket’s Class A vacancy rate dropped to 20.2 percent this quarter, a decrease of 2.4 percent (or 0.5 percentage points) from 20.7 percent.

Year-over-year, overall rents in the Greenwich CBD/Railroad rose to $81.84 per square foot in the third quarter of 2015, an increase of 2.0 percent from $80.26 per square foot. Year-over-year, the county’s Class A rents rose to $89.02 per square foot this quarter, an increase of 5.5 percent from $84.37 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.