XL Group plc is relocating part of its insurance operations within Stamford to the city”™s Harbor Point development, taking 24,000 square feet of space at 2 Harbor Point Square.
Structured Portfolio Management L.L.C. also committed to an equivalent amount of space at 2 Harbor Point, according to brokers with Newman Knight Frank, with SPM currently located across the street at the Clearwater House multi-tenant office building.
It marked the first time in several quarters that the financial services industry fell from the top slot as the most active player in local real estate market, Newmark Knight Frank indicated. Even as XL relocated within Stamford, Partners Reinsurance renewed its lease at One Greenwich Plaza in Greenwich for 40,000 square feet of space, and Arch Insurance Group Inc. took an unspecified lease as well.
Communications led all industries due to NBC Sports Group”™s massive lease at the former Clairol plant in Stamford. In Westchester County, N.Y., the law firm Wilson Elser Moskowitz Edelman & Dicker took a lease for 125,000 square feet, the largest office lease in either county for the quarter.
In Fairfield County, leasing activity rose 23 percent from the third quarter of 2011, though overall activity was substantially lower than 2010. New deals accounted for 58 percent transactions while renewals made up 32 percent, the highest quarterly percentage of the year; and subleases represented 10 percent of the activity.
“(The fourth quarter) seemed to spike a little bit in terms of leasing for 2011,” said Jim Ritman, a managing director in Newmark Knight Frank”™s Greenwich office. “It wasn”™t any huge growth.”
Dating back to the start of last December, commercial real estate markets have been steady or improving, concur researchers with the Federal Reserve Bank of New York. While the Fed termed “modest” the improvement in Fairfield County and Westchester County office parks, the Manhattan market picked up significantly late last year.
Aside from NBC Sports and its companion NHL Network, however, Connecticut is still awaiting any swelling relocation momentum from the city despite Gov. Dannel P. Malloy”™s “First Five” offer for companies adding at least 200 jobs here. A state-backed venture capital fund called Connecticut Innovations pledged this month to intensify its recruitment of startups from other states.
“We are seeing people looking really heavily into the state incentives in Connecticut,” Ritman said. “It”™s something that is a major attraction for the state.”
At last report, XL had more than 400 employees in Stamford at the Seaview House office building. With the new lease, XL becomes the latest high-profile tenant to take up residence at Harbor Point, a massive mixed-use development led by Building and Land Technology, along with McKinsey & Co., Louis Dreyfus Highbridge Energy also occupying 2 Harbor Point Square and SPM to join them.
The hedge fund focuses on investments in the U.S. residential mortgage-backed securities market. Founded and run by Donald Brownstein, in 2010 SPM ran the most profitable hedge fund in the world of those with more than $1 billion in assets, according to Bloomberg News; this year its best fund reportedly ranked 13th with a 15.7 percent return. Westport-based Bridgewater Associates had three funds in the top dozen worldwide.
XL”™s own returns have been buffeted this year by a series of natural disasters, including the Japan earthquake and tsunami, floods in Australia, the New Zealand earthquake and last year”™s spate of tornadoes and wind storms in the U.S.
The company expects the massive recent floods in Thailand to cost it anywhere from $135 million to $185 million. At deadline, XL had yet to release its year-end results. In the first three quarters, its profits totaled $110 million, down from $448 million a year ago.
Despite the impact of the catastrophic events, in a November conference call XL CEO Michael McGavick noted the company”™s increase in net premiums and said the company is benefiting from adding new leadership.
“We”™re something of a hot chop right now, and that is a very important precursor to what comes next,” McGavick said. “We”™re starting to see that already in the top line.”
