To no one’s surprise, Stamford led Fairfield County’s leasing activity in 2019, with its central business district accounting for nearly 1.2 million square feet of the county’s total leasing volume of 3.2 million square feet.
According to Newmark Knight Frank’s fourth-quarter office market report, availability countywide remained stable from 2018 at 26.6%, while net absorption ended the year flat at 8,931 square feet.
“Stamford definitely hit a high point in 2019,” said NKF Research Manager Karolina Alexandre, “and we expect that activity to continue, not only in downtown but south of I-95 as well.”
While another deal as large as WWE’s – which announced in March that it was leaving its 1241 E. Main St. headquarters in Stamford and signing a 16½-year lease for the 415,000-square-foot, three-building complex at 677 Washington Blvd. – is unlikely for 2020, NKF Executive Vice President, Managing Director James Ritman said all the activity in the city bodes well for the county at large.
“There are a lot of good things happening in Stamford,” he said, noting that its central business district on average captures about 25% of the county’s total yearly leasing. Its 1.2 million square feet was 62% above 2018’s figure, and 18.5% higher than the five-year historical average.
“Stamford has become more of a 24/7 community,” Ritman said, “which is what’s drawing activity in the office and the multifamily market. With multifamily you’re seeing more interest from investors outside of the market – from around the country and internationally. Stamford’s really put itself on the map as a multidimensional city, which attracts and retains a large number of people.”
Besides the WWE deal – the media company is expected to complete the move to 677 Washington Blvd. in the spring of 2021 – Alexandre noted such Stamford transactions as Diageo’s planned relocation of its North American headquarters from 810 Main Ave. in Norwalk to 40,000 square feet of office space at 200 Elm St. in Stamford; Cenveo’s 25,590-square-foot renewal at 200 First Stamford Place; Ernst & Young renewing approximately 25,000 square feet at 300 First Stamford Place; and two new deals totaling 37,000 square feet by Thomson Reuters and Wexford Capital, also at 677 Washington Blvd.
The removal of 415,000 square feet of high-priced space at the last address resulted in a countywide decrease in the average Class-A office asking rent, from $40.24 to $39.11 per square foot.
The Stamford central business district ended 2019 with positive 336,000 square feet of net absorption and a 4.1% decrease in availability, from 31% in 2018 to 26.9%, Alexandre said.
In the city’s non-central business district market, Sema4 committed to 150,000 square feet along the waterfront. Class A availability in the market went from 38% in 2018 to 35.6% in 2019, with annual net absorption totaling positive 140,000 square feet.
All together, leasing volume was 3.2 million square feet – up 8.4% from 2018 but still below the 10-year historical average of 3.7 million square feet. The year saw 352 new deals signed, compared with 416 in 2018 and 393 on average, for a total of 1.9 million square feet, a 13.2% year-over-year increase. After WWE, the largest deal was ASML’s taking nearly 100,000 square feet at 50 Danbury Road in Wilton.
Renewal activity was led by Synchrony Financial’s reupping for its 313,000 square feet at 777 Long Ridge Road in Stamford; all told, the county saw 1.1 million square feet renewed.
Norwalk “took a pretty big hit” with GE Capital’s 116,000-square-foot sublease space listed at 810 Main Ave., Alexandre said. Total leasing activity totaled less than 150,000 square feet, 67% below average. In addition, just 28 deals took place over the year, against an average of about 41. Availability rose from 29% to 35.4%, with a net loss of 300,000 square feet in occupancy.
However, NKF remains bullish on Norwalk’s prospects moving forward. “The redevelopment that BLT is doing on Glover Avenue is similar to what they’ve done at (Stamford’s) Harbor Point,” Alexandre said. “That should help drive activity. Plus there are a lot of millennials moving to Stamford who might find Norwalk a good next step.”
Greenwich’s central business district now has a glut of sublease space, following various corporate restructurings and downsizings. With 170,000 square feet of subleases coming on to the market this year, representing 53% of the total available space, the Class A availability rate rose from 7% in 2017 to 13.7% in 2018 to 16.5% in 2019.
Availability in the town’s non-central business district market continues to decline, from 17.5% in 2018 to 16.6% in 2019. The average asking rent grew by 15.4% to $40.78 at year’s end; asking rents at the Greenwich Office Park went from the mid-$40s to upper-$50s. The upward trend is likely due to a shrinking office stock, Ritman said.
Although Danbury was not specifically broken out in the report, Ritman said that the new Summit at Danbury complex, which held a ribbon-cutting ceremony on Dec. 19, has great potential.
“There’s an interesting mixed-use concept at play there,” he said. “Repurposing of that property (at 39 Old Ridgebury Road) was clearly needed, and what happens there will be worth watching.”