Fairfield County”™s office market recorded 1.77 million square feet of leasing activity during 2022, according to new data from CBRE (NYSE:CBRE). This represents a 5% year-over-year uptick, with Class A properties accounting for 78% of the year”™s transactions.
For the fourth quarter of 2022, the county recorded 447,000 square feet of leasing activity, which is 5% below the activity from the third quarter and 6% below the five-year quarterly average. Class A properties accounted for 81% of the quarter”™s transactions. For the third consecutive year, the financial services sector was the driving force for leasing activity ”” 36% of the county”™s transactions were fueled by this industry.
Fairfield County”™s noncentral business district (CBD) submarkets saw the greatest level of activity in 2022, taking up 63% of all leasing transactions. During the fourth quarter, a pair of leases signed at Norwalk”™s Merritt 7 office park that totaled 58,000 square feet resulted in Central Fairfield recording 407,000 square feet of activity, doubling its 2021 level. Eastern Fairfield ended 2022 with 389,000 square feet of activity, its highest activity level in six years. Sublease space accounted for 21% of all available space during 2022.
During the fourth quarter, the largest single transaction was Hudson Bay Capital”™s 47,325-square-foot sublease at 290 Harbor Drive in Stamford. The largest original lease was Viking Global Investors LP”™s 42,352-square-foot space at 600 Washington Blvd. in Stamford.
The office market ended 2022 with a 27.3% availability rate, which was up 30 basis points (bps) from the third quarter and up 140 bps from one year earlier. The quarterly net absorption was negative 94,000 square feet, and the year-to-date absorption was negative 460,000 square feet.
For 2022, the Stamford CBD led the county in negative absorption with 292,000 square feet, while the Greenwich CBD led the fourth quarter with negative absorption of 29,000 square feet in the fourth quarter, which was primarily caused by the 36,000 square foot of space being ”” the latter was attributed to the redevelopment at 145 Mason St., which is slated to become available later in the year.
The average asking rent by the end of 2022 was $36.65 per square foot, a 3% increase from the third quarter and 6% higher than one year earlier. The Greenwich CBD saw the greatest quarterly rent increase with a 14% hike to $103.36 per square foot, which was also attributed to the 145 Mason St. project. In comparison, Greenwich”™s non-CBD submarket only saw a 3% quarterly bump-up to $50.35 per square foot ”” but this was also the submarket”™s highest average rent in 10 years.
Only the Central Fairfield submarket recorded a rent decline in the fourth quarter, with a 1% dip $32.12 per square foot.
