Coincides with Minimal Overall Office Vacancy and Average Asking Rent Declines
Stamford, CT, April 5, 2018 – At the start of 2018, Westchester and Fairfield County suburban office markets registered an uptick in quarter-to-quarter leasing activity and vacancy rates while average office asking rents declined slightly, according to Cushman & Wakefield’s Q1 2018 Westchester/Connecticut Market Report. As both markets are shifting in tenants’ favor, landlords of well-placed product with location and amenities favorable to ‘live-work-play’ have been able to continue to absorb space despite rising rents.
Declining quarter-to-quarter sales activity in both markets, as well significant year-to-date sales declines in Westchester, indicate that tenants may expect to see a reversal of downward rent trends and fewer concessions offered in transactions within recently acquired assets. However, investor enthusiasm in several submarkets remains high following the successful repurposing of multiple assets to mixed-use, incoming residential developments and growing demand for a wide range of office sizes from an increasingly diverse range of companies.
First quarter leasing activity in Westchester was up nine percent relative to Q4 2017, yet comparing Q1 2017 to Q1 2018 the market still trails by about 33 percent. The overall vacancy rate for office in the county is at about 24.6 percent with higher rates in the Hudson Valley and lower vacancy in the submarkets surrounding White Plains. Nonetheless, the rate has remained relatively flat, up less than one percentage point in comparison to Q1 last year. Overall asking rents averaged $28.37 price per square foot, down slightly from last quarter and $1.50 less than the Q1 2017 average.
The East I-287 submarket led in sales volume while finishing last in leasing activity, as investors have focused on buying up and repurposing other assets to office in correlation with plans for major residential development in the area. The White Plains CBD again led the region in leasing activity and average asking rents.
The 44,000-square-foot Willis Towers Watson transaction at 44 S. Broadway White Plains, executed by Cushman & Wakefield, led leasing transactions for the quarter. At $10,000,000, 3 Westchester Park Drive in White Plains was the largest sales transaction in Q1 2018.
“Several White Plains CBD owners have shown a willingness to reinvest in and repurpose existing assets with amenities and designs attractive to the next generation of office users,” noted Jim Fagan, Managing Principal, Connecticut and Westchester Market Leader of Cushman & Wakefield. “These actions, in correlation with incoming residential properties and the walkability and growing ‘live-work-play’ appeal of that submarket has been met with tenant enthusiasm—as well as tightened vacancy rates and higher average asking rents.”
In Connecticut’s Fairfield County, year-to-date office leasing activity is at 665,949 square feet—a nearly 6 percent increase from Q1 2017 and slightly less than 1 percent higher than the previous quarter. Fairfield County sales volume slowed from last quarter’s totals, but still outpaces Q1 2017 by more than 194,000 square feet and $2.3 million. The overall vacancy rate increased 1.1 percent from the previous year to 24.2 percent, and average asking rents of $32.55 are slightly below last quarter and Q1 2017.
In Fairfield County, the largest portion of office leasing in early 2018 took place in the South Central submarket with the Eastern submarket leading in office sales. At 29.5 percent, Stamford has the most available space while the tighter Central submarket vacancy rate runs at 12.4 percent.
The largest leasing transactions for the quarter were Factset’s 176,104 square-foot deal to 45 Glover Avenue in Norwalk, Charter Communication’s 53,482-square-foot transaction at 201 Tresser Boulevard in Stamford and JP Morgan Chase’s 28,495-square-foot transaction at 100 W. Putnam Avenue in Greenwich. At $9.2 million, the sale of 131 Danbury Road in Wilton has been the largest in Fairfield County thus far in 2018.
“While financial services have traditionally taken up the majority of Fairfield County’s office market, the current monetary and fiscal environment and the region’s growing corporate diversity has reduced this footprint,” said Steve Fiore of Cushman and Wakefield. “We have seen an influx in demand from TAMI related tenants seeking smaller blocks of space, as well as a growing information sector led by CA Technologies’ recent deal in Stamford at 200 Elm Street.
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