After a lethargic second quarter that only recorded 308,000 square feet in leasing activity, Fairfield County’s office market rebounded with a 71% spike in the third quarter that reached 528,000 square feet, according to data from CBRE. Leasing performance for the quarter was 15% under the five-year quarterly average.
The third quarter also marked the first time this year that the market recorded positive absorption, totaling 177,000 square feet, which CBRE attributed to the relative absence of available space. The Central Fairfield submarket recorded the highest level of positive absorption at 42,000 square feet, while availability stayed flat at 25.8% The Eastern submarket had the greatest volume of negative absorption at 65,000 square feet, although this was primarily driven by 90,000 square feet of space becoming available at 3 Corporate Drive in Shelton.
Within the county’s major submarkets, the Greenwich CBD recorded net negative absorption of 1,400 square feet and the Greenwich non-CBD saw positive net absorption of 3,600 square feet. The Stamford CBD saw positive net absorption of 133,000 square feet, which created a year-to-date figure positive net absorption of 353,000 square feet, the highest year-to-date level recorded in a third quarter in a decade.
Total availability dropped 40 basis points (bps) to 24.6%, which marked the twelfth consecutive quarter that availability did not move up or down by more than 100 bps from the 24% level. Subleasing availability was at 17.1%, up 440 bps from one year earlier. Class A space accounted for 69% of all leasing activity in the third quarter.
Fairfield County’s average asking rents remained relatively flat quarter-over-quarter at $35.50 per square foot while year-over-year rents across the market were down by 4.6%, which reflects the higher priced space getting leased.
The largest transaction for the quarter was ASML’s lease on 98,907 square feet of office space at 50 Danbury Road in Wilton. The quarter’s other prominent transactions included Sema4’s 67,000-square-foot lease at 62 Southfield Ave. in Stamford, Marc Fisher Footwear’s 62,050-square-foot expansion and renewal at 777 West Putnam Ave. in Greenwich, Sema4’s 58,468-square-foot sublease at 333 Ludlow St. in Stamford, and Cenveo’s 25,590-square-foot renewal at 200 First Stamford Place in Stamford.
Tom Pajolek, executive vice president at CBRE’s Stamford office, observed that while the third quarter’s leasing activity was lower than the 725,000 square feet recorded in the first quarter, there were also a greater diversity of transactions involving a variety of industries.
“The first quarter was dominated by WWE’s big deal,” he said, referring to the media and entertainment company’s 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. “There was no big deal in this quarter, but there were a number of medium and small dals that helped reach the number. That offers a healthy sign that deals are being done.”
Pajolek added that he was looking forward to a robust fourth quarter, noting that the last three-month stretch was traditionally the strongest for the office space market. And while he admitted there were not “a lot of large, large deals hanging out there,” he expressed optimism that a new flurry of midsized and smaller transaction would end the year on a high note.
“As a broker, we always look for green shoots,” he said, with a laugh.