Leasing surges in the 4th Quarter for Fairfield, yet tapers off in Westchester
Stamford, CT – January 29, 2019 – According to Cushman & Wakefield, demand for office space in Fairfield County continued to trend upward in 2018 with overall leasing activity outpacing 2017’s annual demand. In Westchester County, overall leasing activity began to taper off in 2018. Overall vacancy increased and asking rents slightly depreciated in both Westchester and Fairfield counties over a twelve month period.
Demand for office space continued to trend upwards in 2018 with overall leasing activity outpacing 2017’s annual demand by 13.2%. Despite having a 31.8% vacancy rate, nearly one of every three new lease transactions in 2018 occurred in Stamford, which accounted for 50.4% of Fairfield County’s overall leasing. Tenants, however, continued to economize on space with the average transaction size falling approximately 17.1% below the five-year historical average of 10,218 square feet (sf) to 8,475 sf .
With tenants taking less space, the overall vacancy rate in Fairfield County increased 220 basis points (bps) in 2018 to 25.3%. Stamford registered the sharpest year-over-year increase in vacancy—460 bps to 31.8%, which was mainly attributed to GE Energy making its entire building available at 800 Long Ridge Road. Conversely, Greenwich recorded a noteworthy 250 bps year-over-year drop in its overall vacancy rate to 16.5%. Most of the decline in Greenwich’s overall vacancy rate was attributed to strong demand in the Central Business District (CBD), which fell 470 bps to 9.4%, making it one of the only submarkets in the county with a sub-10.0% vacancy rate.
Overall average asking rents in Fairfield County continued to inch lower in 2018, declining by $0.53 per square foot (psf) to $32.47. Stamford’s overall average asking rent ticked upward in 2018 by $1.42 psf to $37.21.
“As tenants continue to densify, expect overall leasing activity to start to taper in 2019 with a slight increase in supply,” said Jim Fagan, Managing Principal, Connecticut and Westchester Market Leader of Cushman & Wakefield. “Submarkets that have access to efficient public transportation networks and building amenities will continue to drive growth in the future.”
The largest office leasing transactions in Fairfield County for the fourth quarter of 2018 included:
- Reed Exhibitions 93,899 square foot new lease at 201 Merritt 7 in Norwalk
- Blue Buffalo’s 50,804 square foot renewal lease at 15 River Road, in Wilton
- Orthopedic & Neurological Surgery Specialist’s 31,305 square foot new lease at 6 Greenwich Office Park in Greenwich
Overall leasing activity in Westchester County began to taper in 2018, down 27.7% from 2017. The East I-287 submarket recorded more than one-third of the total leasing volume in 2018, followed by the White Plains CBD submarket accounting for approximately 25.0% of county-wide demand. The average transaction size continued to shrink in 2018, down 27.4% from the five- year historical average of 8,188 sf. More specifically, healthcare related tenants, who were the predominant lessors of space for 2018, leased an average of 14.5% less square footage when compared to 2017.
The largest leasing transactions in Westchester County for the fourth quarter of 2018 included:
- Serendipity Labs 25,748 square foot new lease at 44 South Broadway in White Plains
- Zeiss Optical’s 24,241 square foot new lease at 1 North Broadway in White Plains
- Townsquare Media’s 20,097 square foot sublease at 1 Manhattanville Road in Purchase
The overall vacancy rate in Westchester County increased 100 basis points (bps) from the start of 2018 to 26.5%. Conversely, the White Plains CBD submarket registered a 70-bp drop in overall vacancy to 17.3% since the first quarter. Quality demand drivers such as building amenities and access to public transportation fueled the decline in the White Plains CBD’s overall vacancy rate, with the most notable being Class A product ending the fourth quarter with a 14.0% direct vacancy rate.
On average, asking rents contracted $1.47 per square foot (psf) in 2018, ending the year at $27.59. The White Plains CBD submarket held a $5.79-psf premium over the rest of the market, with an average asking rent of $33.26 psf. Class A space in downtown White Plains, however, averaged significantly higher at $37.15 psf, mainly attributed to a constrained supply of quality office space. Building amenities, proximity and access
“One of the main drivers of growth in the county going forward will be tenants seeking out quality product,” said Jim Fagan of Cushman & Wakefield. “Expect demand to increase in this market, although future tenants may be prompted to lease less space due to a higher price point in some of the more urban office markets. As a result, supply and overall vacancy are expected to inch up for the county in 2019.”
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Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.