NYC exodus: CBRE exec says Fairfield County has two years to capitalize on moves
Fairfield County has a roughly two-year window to capitalize on the potential of companies relocating to the county from New York City, in the estimation of an executive with the world”™s largest commercial real estate services firms.
“We need to take advantage now,” Tom Pajolek, executive vice president at CBRE”™s Stamford office, said at BOMA Southern Connecticut”™s annual State of the Market presentation, held virtually on Jan. 19.
By 2023, he predicted, Manhattan office workers will have returned to their places of business.
Not surprisingly, Pajolek characterized 2020 as “a slowdown year ”¦ the market pretty much hit pause” in March, when the pandemic arrived in full force. There was roughly 1.3 million square feet of leasing activity for the year in Fairfield County, a market that totals about 41 million square feet ”” “The least amount we”™ve done” on a 10-year annualized basis.
The county”™s availability rate stands at about 26%, Pajolek said ”” a figure he anticipates will remain in effect “for several years” and which favors neither landlords nor tenants.
Furthermore, there now is about 1.2 million square feet available that wasn”™t at the beginning of 2020, he said.
There are bright spots, however: Pajolek cited Greenwich, where rents near the train station are in the $90 per square foot range. Greenwich thus has “a big advantage over the rest of Fairfield County,” he said, comparing it to Stamford ($40-$60 for Class A buildings near its train station), Norwalk (mid-$20s) and Danbury (low $20s).
Nuvance”™s leasing 200,000 square feet at The Summit at Danbury in December was by far the county”™s largest office deal, but Pajolek noted that the next four were relatively paltry: Berkley Insurance (61,000 square feet in Stamford); Melissa & Doug (61,000 in Wilton); Philips Domestic Appliances (42,000 in Stamford); and Lone Pine Capital (38,000 in Greenwich).
Even so, Stamford had “a really busy year, believe it or not,” the city”™s Director of Economic Development Thomas Madden said. Five companies are in the process of moving to Stamford, and 40 have “shown interest” in coming into the county, he said. He promised “some major announcements” during the first and second quarters of this year.
Ted Ferrarone, co-president at BLT, said most of his company”™s office buildings are for the most part still empty as the work-from-home trend ”” which “worked better than most people would have thought” ”” continues. But while retail continues to suffer ”” “It”™s been really tough for all of those guys” ”” residential is booming.
BLT recently opened its luxury Escape building in Stamford”™s Harbor Point, and has another two multi-resident buildings under construction on the city”™s waterfront as well as one in Norwalk. Ferrarone said an unusually high number of queries have been received from New York residents.
Stamford activity ”˜off the charts”™
Madden added that Stamford had a roughly 93% apartment occupancy rate before Covid, which now stands at 96% to 97%. “We”™re off the charts,” he said. “They”™re all moving up to our area, to Harbor Point and downtown.”
Ferrarone agreed that interest in Stamford has been “accelerating for years,” and maintained that those new residents are looking to make a “permanent shift” to Fairfield County.
He noted, however, that the forecast is decidedly less sunny for properties that are significantly distant from a train station. Many “obsolete” offices in Stamford are in need of redevelopment, he said, citing developer George Comfort & Sons”™ so far unsuccessful bid to transform 3 High Ridge Park into a Life Time fitness center.
Faced with the prospect of a one-hour train ride from Manhattan to Stamford, followed by another trip by car or bus to get home, Ferrarone said: “Young people don”™t want to do that.”
Pajolek agreed, citing a recent Cushman & Wakefield study that reported those aged 50 and over were significantly happier to work from home/remotely, while those under 50 preferred being in an office for relationship-building opportunities with coworkers/mentors.
Madden predicted that, as the vaccines are rolled out, more people will be returning to their offices in the May through July. “Onboarding new employees is the biggest problem,” he said. “You can”™t shadow a mentor when you”™re working from home. But over the next six to nine months, people will migrate back to the office fairly quickly.”
With boutique financial services firms coming primarily to Greenwich, Stamford should focus on luring biotech and media firms here, Ferrarone said, building on momentum set by Sema4, which opened a 70,000-square-foot facility in Stamford in December; Charter Communications, which is in the midst of building new headquarters in Stamford, consisting of two buildings measuring a combined 777,000 square feet; and WWE, which in 2019 signed a 16½-year lease for a new 415,000-square-foot, three-building headquarters at 677 Washington Blvd.
“New York City is out of lab space, or it”™s too expensive,” Madden declared, “so those companies can migrate into Westchester County or Stamford.”
He also pointed to The Village, a 133,000-square-foot facility at 860 Canal St. that is being marketed by the Wheelhouse conglomerate as an indoor-outdoor work-play environment, and BLT”™s Peninsula at Harbor Point, a 14-acre waterfront development site that offers development of up to 1 million square feet, as prime opportunities.
“If and when (the Peninsula) gets developed, that will really set Stamford apart as well,” Madden said.
All predictions must be based on the distribution of Covid-19 vaccines, Ferrarone noted. But he said there is “no reason” for the residential boom to slow down this year, while retail and commercial will likely take longer to rebound.