Fairfield County’s office market looks to experience mixed results this year, according to a report by real estate advisory firm Newmark Grubb Knight Frank.
While General Electric’s imminent move from the town of Fairfield, and banking firms UBS and The Royal Bank of Scotland scaling back their presences in Stamford, are expected to have adverse effects on the market through at least the end of 2016, NGKF said it believes residual pent-up demand from 2015 will help raise leasing activity levels this year.
For the first quarter of 2016, just 473,549 square feet of transactions were signed, compared with 1.1 million square feet in the fourth quarter of last year and 1.0 million square feet in the first quarter of 2015. Overall occupancy declined by 26,767 square feet due to fewer space returns compared with previous quarters. Thus did availability remain stable, increasing from 21.8 percent in the fourth quarter 2015 to 21.9 percent.
Meanwhile, available space declined by roughly 500,000 square feet, or 1.1 percent, from first quarter 2015’s rate of 23.0 percent.
First-quarter demand was driven by deals under 10,000 square feet, which posted a 60 percent rise over the same period last year to 320,000 square feet. Larger deals fared poorly: NGKF characterized those between 25,000-50,000 square feet as “virtually nonexistent,” while there were no deals above 50,000 square feet for the quarter.
Renewal activity saw the biggest decline, down 64 percent from first quarter 2015 and 74 percent from fourth quarter 2015. New transactions were also down by more than 50 percent from last year, though the deals for new leases were up from 51 to 73. Tenant contractions were higher than expansions at approximately 85,000 square feet compared with expansions at about 75,000 square feet.
The report also found mixed results on a market-by-market basis. Rental growth was found in Greenwich and the Central markets, including Fairfield and Westport, while the Eastern and Northern markets recorded declines averaging 5.8 percent over last year.
Not surprisingly, the lion’s share of leasing volume was concentrated in Stamford, with only Danbury, Shelton and the Greenwich non-Central Business District also showing increases. Stamford’s activity was topped by legal firm Finn Dixon & Herling’s signing of a new 26,385-square-foot lease at 6 Landmark Square.
Danbury’s Lee Farm Corporate Park recorded three deals totaling over 35,000 square feet, by Global Jet Capital, IMS Health, and GE Capital Corporation. In Shelton, electrical supplies distributor Gexpro signed a new lease for a 20,950-square-foot property at 1000 Bridgeport Ave. and media solutions provider Valassis Communications inked a short-term, 12,899-square-foot renewal at 6 Armstrong Road.
The largest transaction in Greenwich’s non-Central Business District — which had greater leasing volumes than downtown Greenwich — was by Withers Bergman, part of the international law firm Withers LLP, which signed a new 17,589-square-foot lease at 1700 East Putnam Ave.
As for the GE situation in Fairfield, NGKF noted that some observers believe its departure for Boston may end up as a relatively short-lived setback and not the long-lasting economic black eye that others have predicted. The report took particular note of the deal that developer Kleban Properties signed with Fairfield University to renovate and develop the property as a high-tech hub — plans dependent upon GE’s decision on whether or not it will sell the 68-acre property on Easton Turnpike.