What a difference a quarter makes.
After an impressive start to the year with 725,000 square feet in leasing activity during the first quarter, Fairfield County’s office market slowed dramatically in the second quarter with 308,000 square feet in leasing activity, according to data from CBRE. The second quarter marked the lowest quarterly total for leasing activity in the county since the first quarter of 2013.
However, CBRE noted that the combination of the vibrant first quarter and relatively slow second quarter contributed to more than 1 million square feet in leasing activity, the highest level for the first half of a year since 2015.
Tom Pajolek, executive vice president at CBRE’s Stamford office, observed that this level was primarily driven by a single larger-than-normal transaction: WWE signing a 16½-year lease for the 415,000-square-foot, three-building complex at 677 Washington Blvd. in Stamford that was once home to UBS.
“WWE signing in the first quarter carried the day for the year,” said Pajolek. “The second quarter felt slower.”
The second quarter’s largest transaction was Morgan Stanley’s renewal on its 25,191-square-foot lease at 1 Fawcett Place in Greenwich. The largest new leases for the quarter were considerably smaller: a 17,100-square-foot space for Legal & General America at 750 Washington Blvd. in Stamford; a 16,033-square-foot space for Onward Search at 40 Danbury Road in Wilton; and a 15,494-square-foot space for Marblegate Asset Management at 51 Weaver St. in Greenwich.
Fairfield County posted 196,000 square feet in negative net absorption during the second quarter, although 100,000 square feet of this can be traced to the newly removed 860 Canal St. in Stamford and 77,000 square feet to a pair of Shelton properties — 6 Research Drive and 2 Trap Falls Road — becoming available. The Central Fairfield submarket recorded 45,000 square feet in positive absorption, breaking a four-quarter streak of negative net absorption. The second quarter also marked the third consecutive quarter of negative net absorption for the county.
The Greenwich CBD recorded a 14% availability rate, its highest since the third quarter of 2013 but still the lowest among the submarkets. The Stamford CBD saw a 28.9% availability rate and the city’s non-CBD experienced a 31% availability rate.
CBRE also noted that new venture leasing — defined as either new businesses or newly established offices of existing companies — was up substantially, from 10% in the first quarter to 34% in the second quarter. Pajolek noted that these deals were primarily smaller transactions.
As for asking rents, there was a scant six-cent increase quarter over quarter, winding up at an average of $35.35 per square foot. Pajolek observed that Fairfield County still remains “a tenants’ market” due to its vacancy rates, and he did not forecast any rent spikes for the foreseeable future.
As for the third quarter, Pajolek said, “I expect and hope things will pick up, but that flies in the face of what we usually experience in the summer,” he said. “It could accelerate in the fourth quarter, but I’d like to think it would pick up sooner than later.”