The toughest questions Shaun Henderson gets these days from prospective tenants are not how far his building is from the Stamford train station, but rather how close it is to the nearest restaurant.
The Benenson Capital Partners L.L.C. manager solved that problem by hiring DavidӪs Catering to run a caf̩-style eatery at 1600 Summer St. and is now finalizing a lease for the remaining third of the building.
If 2006 served up a smorgasbord of appetizing fare for Fairfield County”™s real estate market ”“ with Royal Bank of Scotland erecting a Stamford office and the $3 billion Harbor Point development progressing ”“ it was the tab paid by a New York City firm that created buzz in the first half of 2007.
In March, RFR Holding L.L.C. agreed to buy seven office buildings in Stamford for about $850 million, or roughly $500 per square foot, believed to be a record price in Stamford. Only the month before, Blackstone Group Inc. acquired the buildings in its $39 billion acquisition of Chicago-based Equity Office Properties Trust, with Blackstone electing to divest properties in some smaller markets in the eastern United States, including Stamford.
The rapid appreciation of the RFR portfolio spurred Stamford Mayor Dannel Malloy to propose freezing Stamford”™s property revaluation process in order to better assess the impact on taxes of inflation in the city”™s commercial real estate sector, with residents squawking that their homes now bear unreasonably high taxes.
Not all companies are happy about the higher rents, either ”“ last month, Procter & Gamble Co. elected to relocate its Conair office in Stamford to Cincinnati where P&G is based. Readers Digest Association, meanwhile, moved its Weekly Reader operations in Stamford to its headquarters in Pleasantville, N.Y.
Still, landlords do not appear to be having much trouble filling space. Henderson is finalizing a lease for nearly a third of the 250,000-square-foot 1600 Summer St., which is owned by his employer Benenson Capital Partners L.L.C. The tenant, whom Henderson declined to identify pending the deal”™s close, will join AON Insurance and the personal-care appliance division of Philips at 1600 Summer. Built in 1980 and originally occupied by GE Consumer Finance, now known as GE Money, the building is situated a mile north of the Stamford train station.
AON, Philips and the building”™s expected new tenant all relocated from points south and west, fitting a general corporate migratory pattern north and east in Fairfield County. In 2005, GE Money vacated 1600 Summer for 777 Long Ridge Road more than two miles north; this year, some of its sister GE divisions have abandoned Stamford”™s northern office parks for Norwalk, including GE Commercial Finance and GE Real Estate.
The latter division is vacating 260 and 292 Long Ridge Road in Stamford, with some 360 employees taking up new quarters on three floors of The Towers at 901 Main St. in Norwalk overlooking the Merritt Parkway, where GE Commercial Finance is based.
GE”™s newest neighbor in Norwalk is its onetime neighbor in Stamford, Xerox Corp. The company abandoned its longtime headquarters at 800 Long Ridge Road for The Towers, subleasing space from Hewitt Associates Inc.
Towers owner Building and Land Technology (BLT), in turn, bought the 250,000-square-foot Xerox building in Stamford for $55 million.
After considering a headquarters move to another state, UST Inc. ended up hopping one town east instead, leaving its Greenwich quarters for 6 High Ridge Park in Stamford. Greenwich hedge fund Strategic Value Partners L.L.C. became the first company to take space in UST”™s longtime Greenwich headquarters at 100 W. Putnam Ave.
The Greenwich market received its biggest boost, however, in Goldman Sachs Group Inc. quietly committing to move into Greenwich American Centre, the former home of the defunct hedge fund Amaranth Advisors. With Royal Bank of Scotland leaving Greenwich in favor of a new 450,000-square-foot building under construction in Stamford; UST”™s move to Stamford, and Unilever relocating its U.S. headquarters to Englewood Cliffs, N.J.; the Goldman Sachs decision showed that premier Manhattan firms are ready to fill the void left by departing companies. As was the case with UST, a hedge fund pounced on Unilever”™s building at 33 Benedict Place, with AQR Capital Management leasing half the building.
In Manhattan, asking rates on premier office space is at an all-time high, according to the Federal Reserve Bank of New York, making Fairfield County a possible Wall Street East for financial firms as their New York City leases come up for renewal.
That point was underscored this spring after officials with JPMorgan Chase mentioned Stamford as a possible site for offices originally planned for downtown Manhattan. JPMorgan Chase ultimately won a package of incentives to remain in New York City.
Looking East
While Unilever is leaving its 125,000-square-foot office at 33 Benedict Place in Greenwich, it reinforced eastern Fairfield County as a draw for companies. Unilever revealed plans to relocated hundreds of jobs to Trumbull from Illinois and Clinton, Conn. The Trumbull facility today is a major research facility for its personal-care products, with more than 1,500 employees.
In Shelton, R.D. Scinto Inc. is building a new 150,000-square-foot office building; the company already owns Enterprise Corporate Park in Shelton, at 1.7 million square feet the largest multitenant office campus in Fairfield County.
BlackRock Realty L.L.C. expected to break ground this month on Fairfield Metro Center, an office and retail complex planned for the town of Fairfield, at 1 million square feet to include a hotel and a train station.
While Stratford-based Sikorsky Aircraft Corp. is expanding its research and manufacturing capabilities in the southern United States, the company took over Dictaphone”™s former Stratford headquarters to develop a heavy-lift helicopter for the U.S. Marine Corps.
Skirmish lines are still drawn regarding the former U.S. Army engine repair facility in Stratford, which has idled for a dozen years due to the difficulties in lining up private-sector developers willing to take on the risk of cleaning up the property.
After a March town referendum stripped a group called Team Stratford of development rights, Connecticut”™s congressional delegation declined a town request to shift the cleanup costs onto the federal government, and to prohibit the U.S. Army from selling off lands in piecemeal fashion. In April, the General Services Administration hired Cushman & Wakefield to assess the redevelopment potential for the 80-acre property; a new developer is expected to be named by this fall, although Team Stratford is still asserting its case that it was improperly removed from the project.
New Haven County
A larger property just 12 miles east in New Haven County failed to find a corporate taker this past spring. With the state given a year to find a new tenant for Bayer AG”™s former manufacturing facility on the Orange and West Haven border, Yale University instead bought the property with 1.4 million square feet of research, manufacturing and office space.
On the Orange-Middlebury border, a planned 1 million-square-foot technology park has already attracted Stamford-based Omega Engineering as a future tenant. North in Naugatuck, Fairfield-based Conroy Development Co. signed a deal to convert a 60-acre brownfield site into a $700 million mixed-use site called Renaissance Place. And in June R.D. Scinto filed plans for three new buildings in Ansonia”™s Fountain Lake Industrial Park.
Those deals did not provide the biggest fireworks in New Haven County ”“ that was reserved for the morning of Jan. 20, when crews demolished New Haven Coliseum to make way for a $230 million urban redevelopment project.
Steel Point
Bridgeport”™s plans for a $1.2 billion redevelopment of the city”™s harbor front continued to crawl, with the city finally finalizing the purchase of most of the needed land that is to be developed by Midtown Equities of Manhattan. As of June, the city was still locked in negotiations with Pequonnock Yacht Club to move the marina to another location.
The former Pequonnock Apartments adjacent to Bridgeport”™s Harbor Yard arena complex moved forward, with development consortiums led by Staubach Co. and Mid City Urban vying to transform the 11-acre parcel into a downtown retail and residential hub.
Bridgeport received another boost in April, when Fairfield-based General Electric Co. offered to match up to $25 million in any state funding to redevelop the city”™s downtown. Fairfield County Bank Corp. revealed plans to open a Bridgeport branch, the first locally based bank to add a free-standing branch in the city since 2001. And the bank sector gave the city another lift in June, when the New York City-based Community Preservation Corp. made Bridgeport the site for its first Connecticut loan; CPC functions as a lender of last resort to jump-start developments in urban areas.
Central
Demolition work not only began this spring on the largest brownfield redevelopment in Fairfield County, but an initial tenant was signed up as well. Norwalk Hospital plans to create satellite doctor”™s offices at the former Gilbert & Bennett wire mill in Redding. The 45-acre site is under remediation and construction by Georgetown Land Development Co., and numbers among the largest mixed-use remediation projects in the country.
The Norwalk Hospital expansion includes iPark Norwalk, National RE/sources”™ conversion of a former PerkinElmer lab in Norwalk, where the hospital becomes the anchor tenant by taking more than 100,000 square feet of space. The hospital also plans to fit out offices on West Avenue in Norwalk, which is under redevelopment.
With The Towers proving Norwalk”™s appeal this year for world-class companies like GE and Xerox, the town has high hopes for Spinnaker Real Estate Partners L.L.C.”™s Reed Putnam project to build 600,000 square feet of office space at the junction of Interstate 95 and Route 7. Norwalk”™s planning committee is scheduled to vote on the project July 16.
“That site has every potential to be almost logo-like where Norwalk is concerned,” said Tad Diesel, Norwalk”™s director of economic development.
Danbury
The project sits at the terminus of Fairfield County”™s largest road project under way, the widening of Route 7 to two lanes in each direction which is expected to quicken the 10-mile drive to Danbury.
Even as Norwalk Hospital undertakes its multifaceted expansion, Danbury Hospital began construction on a $44 million building that will serve as an outpatient diagnostic and imaging center, with 60,000 square feet of total space. The project architect is Flad & Associates, which has a Stamford office.
Elsewhere in Danbury, Grubb & Ellis completed its $81 million transfer of Danbury Corporate Center to a new affiliate. The former Union Carbide headquarters has more than 1 million square feet of space, numbering it among the five largest office parks in Fairfield County.
And Vision Equities bought Lee Farm Corporate Park for $38 million. Tenants in the 215,000-square-foot building include the aviation financing unit of GE Capital; Intel Corp.; and Robert Half International.
Antares transition
If RFR”™s acquisition of the Stamford office portfolio provided an exclamation point for the commercial real estate market in the first half of 2007, Antares Investment Partners”™ Harbor Point development furnishes the biggest question mark for the residential real estate market.
Antares won approval in June from Stamford”™s zoning board for its plan to build up to 4,000 units of new housing along the city”™s waterfront, giving workers easy access to jobs in downtown Stamford.
Even as it throttles up Harbor Point, Antares and investment partners spent $136 million for Stamford Harbor Park, where it has an office; $130 million for UST”™s Greenwich building; and $20 million for the Shops and Inn at National Hall in Westport, a 27,000-square-foot retail site.
Antares today owns more than $5 billion in assets in Fairfield County, estimates founding partner James Cabrera. He says the next fund the company raises for investment will likely be in the $500 million range, and will be devoted to office purchases.
Still, Antares can expect competition for future purchases; Kensico Properties paid $142 million for 55 Railroad Ave. in Greenwich, located across the street from the town”™s train station. The deal was valued at more than $1,000 per square foot of space.
New York City giant SL Green Realty Corp. entered the Connecticut market in January via its acquisition of Reckson Associates Realty Corp. SL Green picked up nine local properties totaling 1.3 million square feet in that transaction.
Since then, SL Green has bought 500 W. Putnam Ave. in Greenwich for $56 million; and 300 Main St. and 1010 Washington Blvd. in Stamford, the latter deal valued at $38 million.
That office was late the home of Philips, which recently removed its signature blue sign from the building and affixed it to its new quarters at Benenson Capital”™s building at 1600 Summer St.
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