Cushman & Wakefield”™s Stamford office noted what the company termed a “soft market” in completing transactions in Westchester County and southern Connecticut on almost 2 million square feet for 2013, including office, retail, medical and industrial space. The figure remained well below prerecession levels.
“When you look at annual office leasing activity averages in Fairfield County over five-year periods, there are notable differences,” said Jim Fagan, senior managing director and market leader of Cushman & Wakefield”™s Fairfield and Westchester regions. “Between 2009 and 2013, the average annual leasing was just over 2.2 million square feet. That”™s a 27 percent difference when compared with the 3 million square feet leased annually during the five years prior.
“In Westchester County, averages were lower. From 2009 to 2013, 1.2 million square feet was leased, which was a decrease of 33 percent versus the five years prior,” he said
According to Cushman & Wakefield”™s research department, the office real estate market remained challenged in 2013 due to a variety of factors, including weak office-using employment growth that “prevented the local office real estate sector from a significant recovery.”
Corporations continued to make their spaces denser, increasing their employee-to-square-foot ratio for space usage, thereby reducing their square footage needs. Finally, due to shifts in demographics and market recovery, new jobs have been disproportionately located in gateway cities, such as New York, Chicago and San Francisco, creating a vacuum in the suburbs. The company said it expects this trend will correct itself over the next 24 months.
While new demand in the office real estate sector remained somewhat stagnant in 2013, there was significant demand in the medical/health care, retail and multifamily residential real estate sectors, Cushman & Wakefield (CW) reported.
Large hospitals are merging and acquiring smaller practices in order to increase efficiencies and lower costs, CW said. Health care providers are also looking to expand into under-supplied locations via satellite locations. Locally, class B and C office buildings are being repurposed for medical use, and there has been an increase in the construction of medical buildings in order to accommodate new health care technology.
In the retail sector, occupancy rates and pricing in high-street retail locations, such as Greenwich and the White Plains central business district, have steadily increased over the last few years. As a result, asking rental rates for luxury retail locations are expected to experience double-digit percentage growth within the next few years.
Fairfield and Westchester”™s population grew by 2.9 percent and 2 percent, respectively, between 2010 and 2014, “creating strong demand for multitenant housing in a struggling single-family housing market.” As a result, 3,570 multifamily units were constructed in Fairfield County and 1,638 multifamily units in Westchester County since 2008.
