The vacancy rate for high-end office space in Fairfield County hit the highest level in eight years, according to a new report, even as a massive lease in Wilton helped chip away at that figure.
Commercial brokerage company Cushman & Wakefield said a post-recession increase in the office vacancy rate is a normal part of the early stages of economic recovery where real demand has not yet kicked in and, as leases roll, companies continue to take less space than they previously occupied.
Thanks primarily to Bridgewater Associates”™ lease of 225,000 square feet of space at Wilton Woods Corporate Center, leasing activity rocketed up more than 70 percent in the second quarter. That knocked the vacancy rate in the 1.7 million-square-foot submarket of Wilton and Weston to a mere 4.5 percent ”“ still trailing Fairfield, which with a 1.5 percent vacancy rate is the market leader.
Danbury trailed the Fairfield County market with a vacancy rate of 24.4 percent, followed by Stamford”™s outlying districts at 24 percent.
Overall, Cushman & Wakefield calculated a countywide vacancy rate of 21 percent. The average asking rates for direct leases edged up just a few pennies from the first quarter to about $33.60, but that represented a 6 percent hike from a year ago.
“There was a surprisingly good pop at the early part of 2010, and since that time we have been kind of riding that wave,” said Jim Fagan, senior managing director for Cushman & Wakefield”™s operations in Fairfield County and Westchester County, N.Y. “Ordinarily those waves accelerate ”¦ this one just does seem to be taking a little bit longer ”¦ The people who we are talking to are saying, ”˜our numbers are better than how I feel.”™”
Still, landlords and tenants executed a total of 130 new transactions in Fairfield County during the first half of 2011, a 37 percent increase from the first half of 2009. Half of those leases occurred in downtown Stamford buildings owned by New York City-based RFR Realty.
In Stamford, precious metals trader Glencore International plc renewed a lease for more than 45,000 square feet of space at 301 Tresser Blvd., while W.R. Berkley Corp. expanded into 23,000 square feet at the same building and the engineered materials company Hexcel Corp. took 22,000 square feet a few doors over at 281 Tresser Blvd.
In Greenwich, the founders of Freepoint Securities relocated from their Westport startup quarters into 23,000 square feet of space at 5 Greenwich Office Park, while AQR renewed a lease for 60,000 square feet at 2 Greenwich Plaza.
In Westport, Wells Fargo Advisors took nearly 26,000 square feet at 450 Post Road E.
In Westchester County, meanwhile, Merrill Lynch took on a 23,000-square-foot sublease at 2 International Drive in Rye Brook.
In its own commercial real-estate survey with Farmington Bank, the Connecticut Business & Industry Association said overall activity statewide slowed a bit in the second quarter, with erratic employment growth as employers take a wait-and-see approach to permanent future hires.
Fagan agreed, but said companies are easing back into things on that front.
“When you cut (jobs), you don”™t get the benefits of those cuts for a while,” he said. “People are getting enormous benefits from the cuts they made 18 months ago ”¦ Companies cut their headcounts and then their leases expired, so they are taking less space.”
