Leasing Volume Highest in Fairfield County, CT Since 2010

STAMFORD, CT—Driven by new lease deals and relocation transactions, the Fairfield County office market posted 850,000 square feet in office transactions in the second quarter of 2014, bringing total year-to-date leasing volume to 1.6 million square feet, the highest midyear total seen in Fairfield County in four years.

The second quarter leasing activity as reported by brokerage firm JLL, was dominated by health services and media tenants. Two of the three lease deals over 100,000 square feet inked so far this year were signed in the second quarter. United Healthcare Group leased 107,688 square feet at 4 Research Drive in the Route 8/Shelton submarket, and technology firm Datto Inc. expanded by 100,000 square feet at 101 Merritt 7 in the Route 7 corridor. During the previous quarter, Deloitte LLP signed for 117,700 square feet at BLT Financial Center.

The steady deal volume helped absorb some long-vacant blocks of space, fueling more than 250,000 square feet of positive net absorption for Stamford year-to-date. Stamford's overall vacancy rate declined to 25.2% in the second quarter of 2014, a decrease of 2.3% (or 0.6 percentage points) from 25.8% one year earlier. The Class A vacancy rate dropped to 25.4% this quarter, a decrease of 3.8% (or 1 percentage point) from 26.4% in the second quarter of 2013.

JLL expects office leasing activity to remain stable for the remainder of the year, noting that there are space users with approximately 2.3 million square feet in requirements currently studying Fairfield County's office market for space.

“A surge of buildings on the market and ongoing distressed note sales have introduced new players into Fairfield County's real estate sector,” says Robert Ageloff, managing director and head of JLL's CT/Westchester office. “These investors are acquiring buildings with rent and concession underwriting that will keep asking rents high in the short term. We expect to see more market-reflective asking rents, concessions and net effective rents once these new owners' expectations adjust to the actual level of demand.”

Fairfield County's overall vacancy rate fell to 22% in the second quarter of 2014, a decrease of 3.1% (or 0.7 percentage points) from 22.7% one year earlier. The county's Class A vacancy rate dropped to 21.3% this quarter, a decrease of 4.9% (or 1.1 percentage points) from 22.4% in the second quarter of 2013.

Overall average asking rents fell to $32.87 per square foot in the second quarter of 2014, a decrease of 1.2% from $33.26 per square foot one year earlier. Rates for the county's Class A properties dropped to $36.29 per square foot this quarter, a decrease of 3.0% from $37.42 per square foot in the second quarter of 2013.