In the third quarter, several large blocks of office space came onto the commercial real estate market in Fairfield County, a possible opportunity for the state of Connecticut to lure a major new employer.
Three major office spaces hit the market in the third quarter, as tracked by RHYS Commercial Real Estate, a company in Stamford. The GE Asset Management unit of General Electric Co. is vacating 3001-3003 Summer St. in Stamford, in favor of space being abandoned by Purdue Pharma L.P. at 1600 Summer St. as the pharmaceutical maker relocates to its former quarters downtown. UnitedHealth Group is turning out the lights on nearly 150,000 square feet of space at Health Net Inc.”™s offices at 100 Beard Sawmill Road in Shelton. And more than 110,000 square feet of space at 20 Westport Road in Wilton is coming onto the market, in a building held by Louis Dreyfus Corp.
Space additions to the market have slowed and reflect the normal business cycle of lease expirations rather than mass layoffs, according to Cory Gubner, CEO of RHYS.
RHYS tracked leases for 666,000 square feet of space in the third quarter, and calculated a countywide office availability rate of 22.2 percent, flat from the second quarter. Impacting the availability rate is lesser amounts of sublease space being put on the market. With 2 million square feet of space available on sublease still available, Gubner believes that space will have to be absorbed before landlords will see any real momentum in leasing space directly to new tenants.
Brokers say large Stamford landlords like RFR Realty L.L.C., SL Green Realty Corp. and Malkin Properties continues to be helped by a significant number of buildings that currently stand empty, notably 695 E. Main St. in Stamford, previously the headquarters of General Reinsurance Corp.; and 600 Steamboat Landing in Greenwich, most recently the home of RBS Greenwich Capital before the company relocated to Stamford last year.
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“There are some buildings that are kind of out of service,” said Jim Fagan, senior managing director of Cushman & Wakefield”™s Stamford office. “(The) Gen Re (building) is not able to take tenants, which makes the rest of the market tighter. ”¦ It certainly helps RFR that they are not competing for tenants. It helps SL Green that they are not competing for tenants, it helps Malkin that they are not competing for tenants.”Companies with expiring leases are more likely to give back space in order to “right size” their offices to meet current employee counts, especially if they are trying to cut costs and do not see expansion in the near future, according to RHYS. Companies with expiring leases that are farther out may have mothballed excess space, so when they are ready to hire it will not translate immediately into a need for more office space.
Besides GE Asset Management”™s lease at 1600 Summer St., other significant leases in the third quarter included General Motors Corp.”™s taking 26,000 square feet at 39 Old Ridgebury Road in Danbury; and, as first reported by the Fairfield County Business Journal, McKinsey & Co.”™s deal for 24,000 square feet at 2 Harbor Point Square, a new building being constructed in Stamford by Building & Land Technology.
Major lease renewals include Citigroup”™s 82,000 square feet of space at 750 Washington Blvd. in Stamford; Elizabeth Arden”™s deal for 50,000 square feet at 200 First Stamford Place; and Arch Chemicals Inc.”™s renewal of nearly that much space at its headquarters location in Merritt 7 Corporate Park in Norwalk.
