Leasing activity resumes as Q2 closes

 

With the two largest lease deals in the second quarter, eastern Fairfield County remains southwest Connecticut”™s tightest office market with availability rates just above 10 percent, according to new data released by CB Richard Ellis.

In June, Hubbell Inc. struck a deal to take more than 110,000 square feet of space at 40 Waterview Drive in Shelton, the largest deal of the first half in Fairfield County. The Orange-based company makes electrical and lighting systems.
Just one other deal in Fairfield County approached the 100,000-square-foot mark in the second quarter ”“ Royal Bank of Scotland”™s renewal of 88,000 square feet of space at 1000 Lafayette Blvd. in Bridgeport. In March, Sikorsky Aircraft Corp. inked a lease for 88,000 square feet at 6 Corporate Drive in Shelton.

On a net basis, more than 600,000 square feet of space became available in the second quarter in Fairfield County, according to CB Richard Ellis, which has its local office in Stamford. While that was less than the nearly 1 million square feet that opened up in the first quarter on a net basis, it nevertheless helped push the availability rate for vacant office space to nearly 20 percent of the overall market, up from 18 percent in the first quarter and just under 15 percent a year ago.

Commercial office landlords dropped their asking rents by $1.40 a square foot on average in Fairfield County during the second quarter.

Greenwich had the sharpest increase in available space, with the figure spiking from 14 percent to nearly 19 percent thanks in part to Royal Bank of Scotland abandoning its 600 Steamboat Road facility to occupy its new regional headquarters building in Stamford. Downtown Stamford was the lone area to see a decline in the availability rate, which dipped to 25 percent in the second quarter from 27 percent the preceding period.

“There is a flight to quality (underway),” said William Cuddy Jr., executive vice president in CB Richard Ellis”™ Stamford, Conn. office. “The owners that have made investments in their real estate and maintained good relations with their tenants ”“ they”™ll excel. The owners that have overbought, over-financed and underserved (tenants) will face increasing vacancies and some issues.”

In what would be the largest real-estate purchase to date this year in neighboring Westchester County, N.Y., Sloan Kettering Institute appears to be finalizing plans to purchase a former Verizon Communications Co. facility just across the Connecticut border, likely for satellite medical clinics and offices. ?Sloan Kettering did not respond to a request for confirmation. In response to a question, CB Richard Ellis brokers said Connecticut did not appear to be in the running to attract the facility.

To date this year in Westchester County, the only significant real estate transaction had been Diversified Investment Advisor”™s agreement to take more than 100,000 square feet of space in Harrison.

Availability rates in Westchester County held steady between the first and second quarters at just above 17 percent.
In both markets, high-end properties fetched a significant increase in activity, according to Robert Caruso, senior managing director in CB Richard Ellis”™ Stamford office, giving some hope that businesses are gaining confidence in the economic recovery ”“ if only a soft confidence.