The influx of new residents and households into southern Fairfield County has been a “silver lining” in the midst of the health and economic crises, according to Houlihan Lawrence”™s latest commercial market report.
That inpouring has been particularly beneficial for the high end of the residential market, while the improved state budget forecast, a booming stock market and real estate conveyance tax income derived from higher residential unit sales and pricing have added to a positive outlook.
Houlihan cited Valley East Building Management”™s $10 million acquisition of the Mill River Building in Fairfield as proof that the area has become more attractive for income-producing investments.
Multifamily residential transactions that Houlihan said reinforce an ongoing optimistic outlook for the county included The California State Teachers”™ Retirement System acquiring a majority interest in Fairfield Residential Co. LLC from Brookfield Asset Management; and New York-based Sentinel Real Estate”™s $53 million purchase of The Sheffield SoNo in Norwalk.
Meanwhile, leasing activity and demand for Greenwich offices improved during the quarter, led by sublet deals which recorded their highest volumes in years. Reported pricing also increased, scoring a 5% step-up versus the prior quarter with pricing gains led by direct leasing deals.
Vacancy increased but pricing held in the greater Fairfield region. In Greenwich, retail space availability increased 2.89% during the year. Food and personal service establishments, important for sustaining foot traffic for the Greenwich retail segment, are operating at a reduced activity level and in survival mode. Retail real estate pricing has continued to weaken, falling 9% during the year. Sublet activity is also weak.
Fairfield County’s overall retail presents a somewhat better picture with vacancies only slightly higher, by 0.6%, and with stable pricing. New leasing deals are closing; however, leasing activity has not been robust enough to compensate for the departures resulting in the rise in vacancy.
One exception of boutique brand owner confidence is BE Chocolat, which opened a new location at 75 Hillside Road in Fairfield last month.
Large format stores are also capturing new tenant interest. The Kohl”™s on Tunxis Hill Cutoff in Fairfield is likely to be replaced by a Floor & Decor store and an Aldi grocery store, provided all zoning permits are secured.
In contrast with other regions of the country, Fairfield”™s investment sales transaction volume did not record a significant drop during the fourth quarter or in the year 2020. That niche, low-volume market appears to have continued to capture investor interest when fairly priced high value assets have come to market, according to Houlihan.
