Leasing surges in the 3rd Quarter
Stamford, CT – October 9, 2018 – Cushman & Wakefield announced today the results of the Q3 2018 Westchester and Fairfield Office Market Reports. While leasing activity increased overall year-over-year for both Fairfield and Westchester Counties in the third quarter, overall office vacancy in both counties increased over the last twelve months. Despite the notable uptick in demand, supply remains abundant. Asking rents fell across both counties over the last twelve months. Looking forward, leasing activity in Fairfield County is anticipated to outpace last year’s annual demand, in contrast to Westchester County where the outlook is a bit more modest for the rest of the year.
In Fairfield County, leasing surged surpassing third quarter demand in 2017 by 63.6 percent with 907,849 square feet transacted. Stamford led the county in transactional volume, accounting for approximately 53.0 percent of the total square footage leased. Greenwich also saw an increase with nearly a 27.0 percent year-over-year increase in year-to-date demand.
“Strong demand in Greenwich has led to a significant tightening in the Greenwich CBD office market. Pricing has not quite come back yet to 2007 levels, but we are seeing a movement back towards those levels,” said Jim Fagan, Managing Principal, Connecticut and Westchester Market Leader of Cushman & Wakefield. “In contrast to Greenwich CBD office market’s tightening, tenant downsizing and relocations in Stamford and Norwalk increased the vacancy rate in those markets.”
The largest office leasing transactions in Fairfield County for the third quarter of 2018 included:
- Louis Dreyfus’s 41,469 square foot renewal lease at 40 Danbury Road in Wilton
- KPMG’s 35,848 square foot new lease at 677 Washington Boulevard in Stamford
- Axiom Capital’s 21,401 square foot new lease at 33 Benedict Place in Greenwich
The overall vacancy rate in Fairfield County for the third quarter is 24.6 percent, which is up from 23.6 percent for the third quarter 2017. While Stamford saw the largest increase year-over-year, strong tenant demand in Greenwich’s pushed its CBD vacancy down to 9.8 percent to the lowest level in over 5 years.
Rents in Fairfield County averaged $32.21 per square foot, a decline of $1.57 per square foot over the last twelve months. The decline is attributed to strong demand in the Greenwich CDB market, where both 55 Railroad Avenue and Pickwick Plaza completed significant leases.
In Westchester County, leasing activity increased 37.3 percent in the third quarter, up from the previous quarter. However, year-to-date demand fell 41.6 percent in comparison to the same period last year with 653,734 square feet transacted. Downtown White Plains (Class A product) saw the steepest year-to-year decline in activity falling 54.2 percent and is being attributed to the shrinking available supply of space in the district.
“Despite this slowdown in leasing year-over-year, vacancy is expected to fall due to landlords finding creative ways to reposition non-competitive office product,” said Steve Fiore, Research Analyst at Cushman & Wakefield. “As a result, we remain bullish on the Westchester office market, most notably for transport-oriented districts within our markets.”
The largest leasing transactions in Westchester County for the third quarter of 2018 included:
- Montefiore Hospital’s 30,000 square foot new lease at 555 Taxter Road in Elmsford
- Infogroup’s 15,200 square foot new lease at 4 International Drive in Rye Brook
- Crown Castle’s 10,983 square foot new lease at 1 North Broadway in White Plains
The less urban, non-CBD sectors of the Westchester market continue to have a high and increasing vacancy rates while the more urban CBD locations (such as downtown White Plains and Yonkers) are in higher demand; Westchester County’s total vacancy is 25.1 percent while the vacancy in CBD White Plains is only 15 percent.
Similarly to Fairfield County, over the same period, Westchester asking rents fell by $1.79 per square foot and are now averaging $27.45. Large vacancies in the northern markets and the shrinking supply of Class A product in downtown White Plains were the largest contributors to the year-over-year lessening in asking rent. Because of that supply shortage, White Plains CBD was the only sub-market to post a year-over-year uptick in the average asking rent, which increased almost 5 percent to $1.48 per square foot to $36.59.
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