Leasing activity during the first quarter in Fairfield County”™s office market was down by 44% from the fourth quarter of 2019, according to new data released by CBRE.
The first three months of the year generated 272,093 square feet in leasing activity, with most of the major transactions occurring in the suburbs rather than the central business district (CBD) zones. The median deal size in Fairfield County was 3,016 square feet, down 33% quarter over quarter and down 17% year over year.
Only two leases during the quarter were greater than 20,000 square feet: ImageFirst”™s 65,000-square-foot space at 50 Commerce Drive in Trumbull and Forrester Research”™s 23,789-square-foot space at 501 Merritt 7 in Norwalk.
The county recorded 146,000 square feet of negative net absorption for the quarter, with the bulk of that figure coming from Purdue Pharma”™s shedding of 105,000 square feet at 201 Tresser Blvd. in Stamford. The countywide availability rate was largely unchanged, with a relatively mild 10 basis point increase quarter over quarter to 23.7%. The $34.34 per square foot average asking rent was a scant dip from the $34.50 figure in the previous quarter.
The COVID-19 pandemic did not begin to take a toll on the economy until late March and, thus, had relatively little impact on Fairfield County”™s office market. In its data report, CBRE theorized that while the pandemic is forcing the economy into a recession that could bring significant job losses during the first half of the year in sectors including food and beverage, retail and transportation, office-using employment may not suffer the harsh impacts that transpired in previous recessions.
“The unique nature of this downturn should result in a swift economic recovery that could begin as early as Q3 2020,” CBRE”™s report stated. “Assuming the coronavirus peaks this summer in the U.S. ”“ mirroring China”™s experience ”“ the U.S. government”™s fiscal and monetary stimulus will begin to bear fruit. This will be paired with pent-up demand that could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.”
However, CBRE also warned that the “recovery of the real estate market will likely lag the overall economy, taking up to three years for all sectors to recover.”
