CBRE: Fairfield County Q2 office leasing down 50%
The economic tumult created by the Covid-19 pandemic resonated in Fairfield County”™s office market during the second quarter as leasing activity plummeted by 50% from the first quarter and by 56% from one year earlier, according to new data from CBRE.
The county”™s second quarter leasing activity totaled 135,591 square feet. The quarter”™s total was 77% lower than the five-year quarterly average and the lowest total on record. Only 21 leases were transacted in the second quarter, compared with 43 in the first quarter, and just one lease recorded more than 20,000 square feet: Bankwell Financial Group”™s 29,500-square-foot lease at 258 Elm St. in New Canaan.
The lack of demand for office space created a 150-basis-point quarterly increase in the local availability rate to 25.2%, with 42% of that new availability from sublease space. The second quarter”™s sublease space total of 228,000 square feet accounted for 27% of the new availability by square feet ”“ a dramatic increase from the 6,200-square-foot volume of sublease space added in the previous quarter and the 92,000-square-foot volume from the second quarter of 2019.
The average asking rent for office space in Fairfield County during the second quarter was $34.35, largely unchanged from the first quarter and only 2% lower than the previous year.
Within Fairfield County”™s submarkets, central Fairfield recorded the largest leasing activity total at 69,242 square feet, which was roughly more than half of the county”™s total. The quarter”™s two largest leases were based in this submarket: Bankwell”™s New Canaan transaction and Cadenza Innovation”™s 16,900-square-foot lease at 372 Danbury Road in Wilton. CBRE noted an uptick in deal size among transactions in the 5,000- to 10,000-square-foot range, which boosted the quarterly median deal size from 3,016 square feet to 4,500 square feet.
The combined Greenwich submarkets totaled 34,746 square feet in second quarter leasing activity, almost double the total from the previous quarter. On the flip side, the Stamford CBD submarket squeaked out 32,603 square feet, the lowest quarterly total on record.
Despite the difficulties in the market, CBRE Executive Vice President Tom Pajolek observed the second quarter saw the arrival of office seekers from another market that was experiencing even greater turmoil
“Despite setbacks during the second quarter, the Fairfield County office market has begun to see activity from New York City occupiers seeking satellite office space closer to their Fairfield-based workers who are not yet ready to use mass transit,” said Pajolek. “We”™ve seen several small tenants take space already and anticipate this trend will continue into the third and fourth quarters of the year.”