Mixed results in 2023 for Fairfield County’s office market

Fairfield County’s office market wrapped up 2023 with 1.49 million square feet of leasing activity, according to new data from CBRE. This represented a 16% decline from 2022 and was 31% behind the 10-year annual average.

For the fourth quarter of the year, leasing activity totaled 419,000 square feet, up 60% from the third quarter and on part with the five-year quarterly average. The quarter’s largest transaction was the 51,021-square-foot renewal and expansion of Happy Hour 4 Kids’ location at 68 Southfield Ave. in Stamford. The largest new lease during the quarter involved AON Corporation’s 40,013-square-foot space at 800 Connecticut Ave. in Norwalk.

The county’s year-end total for net absorption was positive 481,000 square feet; in the fourth quarter, the net absorption was negative 16,000 square feet.

“The positive absorption in 2023 was driven in large part by the slated residential conversion of 1 Elmcroft Road in Stamford, which removed 457,000 square feet of space from availability,” stated the CBRE data report.

The county’s tenants were on the hunt for Class A properties, according to CBRE, with 80% of the leasing activity occurring in this segment for a total of 1.19 million square feet. In the fourth quarter, 81% of leasing activity took place in Class A buildings.

“Prime Class A assets are performing well relative to inventory – prime buildings capture 29% of annual Class A leasing activity, despite accounting for only 16% of Class A inventory,” said CBRE’s data report. “Financial firms supplied 30% of leasing activity in 2023 and led all other industries for the fourth year in a row. The insurance sector accounted for 24% of the year’s leasing activity followed by the health care industry at 9%.”

Within the county’s submarkets, the Stamford Commercial Business District (CBD) ranked highest in office leasing for the tenth year in a row – a total of 500,000 square feet of transactional activity was recorded, with 76,000 square feet in the fourth quarter. The Stamford CBD contributed to 34% of the county’s total leasing in 2023, even though its annual leasing was down 9% from one year earlier. The office property at 400 Atlantic St. was the submarket’s busiest location, with five new leases in 2023 totaling 170,000 square feet.

The Greenwich CBD closed 2023 with 117,000 square feet of leasing, up 9% from the previous year. However, this submarket ended the year with a whimper instead of a bang – only 16,000 square feet of activity, down 38% from the previous quarter and 57% below the five-year quarterly average.

The Fairfield Central submarket recorded its most vibrant quarter since third quarter of 2019 thanks to 164,000 square feet of activity in the fourth quarter. AON Corporation fueled the fourth quarter spike with the two largest new leases in the county – a short-term 40,000-square-foot lease at 800 Connecticut Ave. in Norwalk and a long-term 25,000-square-foot least at 1 Market St. in Darien.

The average asking rent for the county was $35.11 per square foot, a 4% decline from one year ago. This drop was attributed to the residential conversion at Stamford’s 1 Elmcroft Road and the aforementioned leasing activity at 400 Atlantic St. in Stamford.

The Greenwich CBD had the highest average asking rent at the end of the year with $109.37 per square foot, up 6% from year-end 2022. CBRE attributed this to “the addition to the available supply of Viking Investments’ office space at 55 Railroad Ave.”

In comparison, Stamford CBD’s average asking rent was $46.74 per square foot, up 2% from one year earlier. Stamford Non-CBD recorded an average asking rent at year’s end of $31.97 per square foot, which CBRE ascribed to the addition of 188,000 square feet of space at 1600 Summer St. that was priced higher than the market average.