With business mired in a holding pattern as markets await the outcome of the Nov. 6 elections, commercial leasing velocity fell by double-digits in Fairfield County during the third quarter, according to CBRE Inc.”™s quarterly market report.
The number of commercial real estate transactions declined nearly 12 percent in the third quarter, while the average deal size dropped 5 percent to about 7,400 square feet.
In all, CBRE reports there were 76 transactions totaling just more than 563,000 square feet finalized in the third quarter, compared to 86 transactions totaling 674,000 square feet that were finalized in the third quarter of 2011.
The county”™s commercial vacancy and availability rates were virtually unchanged at 20.1 percent and 21.3 percent, respectively, according to the report.
Steven Greenbush, a senior vice president of CBRE”™s Stamford office, attributed the slowdown to a lack of interest among outside companies in moving to Fairfield County, as well as a lack of motivation among those already in the county to expand their facilities.
“We”™re definitely in a slow leasing cycle,” Greenbush said. “We”™re not seeing the corporate growth. We”™ve only seen companies renew ”“ they”™re not growing. And I think that”™s our biggest issue right now.”
Greenbush said it appears that companies have stopped downsizing and suggested many could be postponing decisions to expand until after the election.
“We”™re not seeing much new space hit the market and I think most tenants have right-sized,” he said. “In general, a lot of it has got to do with the election. ”¦I think that (outcome), no matter what it is, will give us some stability.”
Year-to-date, leases have totaled 1.5 million square feet of space in Fairfield County, compared with leases totaling 1.9 million square feet of space for the year ending Sept. 30, 2011 and 2.4 million square feet of space for the year ending Sept. 30, 2010.
Activity was most robust in the Stamford market and in the county”™s central region, which together featured 78 percent of all transactions executed during the third quarter of 2012, up from 58 percent in the third quarter of 2011.
The Stamford area saw 31 transactions comprising 263,000 square feet of space, headlined by deals that saw Charter Communications Inc. and Freepoint Commodities L.L.C. take a combined 133,000 square feet of space off the market.
With the exception of those two major deals, however, Greenbush said the Stamford market has “definitely seen a slowdown.”
“In general, when you”™re looking at the things that”™ll drive the market, the 5,000s and the 10,000s, the quality spaces are just not out there,” he said.
In the central Fairfield market, there were 28 lease deals totaling 220,000 square feet of space during the third quarter.
The eastern and northern Fairfield County markets saw a significant drop-off in leasing activity: In the third quarter, the two markets featured just 10 lease deals totaling 46,500 square feet after combining for 25 deals totaling more than 320,000 square feet of space a year ago.
Likewise, the Greenwich market ”“ which is largely driven by the town”™s financial tenants ”“ saw a similar decline, with seven lease deals totaling 35,000 square feet in the third quarter, compared with 11 deals totaling 100,700 square feet a year ago.
One factor contributing to the marketwide slowdown could be a lack of available spaces in the vicinity of the county”™s Metro-North Railroad stations, Greenbush said.
“As long as you can access the train, the markets are performing very well,” Greenbush said. The problem, he said, is that “not much is available right now.”
