With confidence growing in the economy, office leasing activity in Fairfield County is booming. Last year”™s overall leasing finished at 2.9 million square feet, which was 17 percent above the five-year average leasing of 2.5 million per year.
While office leasing activity dipped in Westchester County from 1.7 million square feet in 2013 to 1.3 million square feet last year, Fairfield County experienced a 28 percent uptick during the same period, according to a recent CBRE Group Inc. report. Fairfield County”™s leasing activity went up from 2.3 million square feet in 2013 to 2.9 million square feet last year.
The town of Greenwich and city of Stamford notably experienced pent-up demand for office space in 2014. Fewer vacant offices were returned and expansions in the commercial business districts brought about a high positive net absorption.
“Absorption refers to the net change in occupied space versus space being returned,” said Paul Jacobs, executive vice president at CBRE in Stamford. “The higher the positive absorption the better it is for the market.”
CBRE”™s report cited key county tenants taking new space, including Starwood Hotels & Resorts Worldwide Inc. at 333 Ludlow St. in Stamford; Deloitte LLP at 695 E. Main St. in Stamford; UnitedHealthcare Group at 4 Research Drive in Shelton; Datto Inc. at 101 Merritt 7 in Norwalk; Sikorsky Aircraft Corp. at 1 Far Mill Crossing in Shelton; and Vineyard Vines LLC at 181 Harbor Drive in Stamford.
“We want the 20 percent availability rate in Fairfield County to go down even more,” Jacobs said. “We”™re seeing large tenants in the marketplace that could take down large blocks of space. There”™s more indication of tenants that will make large transactions or commit to large blocks of space that takes offices off the market. There are a couple of tenants in the market looking to do that.”
To attract more businesses, some landlords may contribute significant capital toward renovation projects. Three of the six top transactions for office space in Fairfield County were completed in buildings where the landlord provided a generous capital contribution, Jacobs said. Those included Deloitte, Datto and Vineyard Vines.
Other factors that have made Greenwich and Stamford more alluring to potential tenants are their accessibility to mass transportation, proximity to retail and restaurants and quality of tenants, Jacobs said. He added that going into this year, he hopes that the county continues to attract tech, health care, financial, advertising and education-based businesses to the area.
With the news that RBS is weighing options regarding whether it should move out of Stamford, landlords in Fairfield County are increasingly aware of the need to not only attract, but to retain, businesses.
“Tenants are looking for quality space and landlords demand high quality tenants,” Jacobs said. “We”™re hopeful and cautiously optimistic that Fairfield County will continue to increase the number of businesses relative to New York City and other outlying markets. At the end of the day, it”™s about how aggressive and creative landlords are willing to be to attract those transactions.”
As the economy grows and companies feel “bullish,” they”™ll gain the confidence to keep growing in Fairfield County, Jacobs said.
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