W.R. Berkley signed a lease for 25,642 square feet at the Landmark Square complex in Stamford during this year’s third quarter. The deal was one of many signs of a busy commercial real estate market in Fairfield County.
Housing has been the bright spot in the real estate market, and the economy at large, for the past few years. But now it seems it is commercial real estate’s time to shine in Connecticut as the housing market flattens, and news of commercial activity continues to come out of the state’s urban areas.
Fairfield County’s market in the third quarter of this year was characterized by overall stability, drops in vacancy rates and firming of prices.
“I think landlords are feeling pretty bullish about the market,” said Belinda Scanlon, senior vice president at Albert B. Ashforth Inc. in Stamford.
According to Albert B. Ashforth’s statistics, the vacancy rate for Class A buildings in Fairfield County dropped to 14.6 percent from 16.4 percent in the second quarter. There was almost 5 million square feet of Class A space available at the end of the third quarter, versus nearly 5.6 million square feet at the end of the previous quarter.
At the end of the third quarter in 2005, the vacancy rate was 17 percent and there were more than 5.8 million square feet available.
The decreasing vacancy rate and firming prices are due to the lack of new commercial construction in the area, coupled with some companies coming to Fairfield County from New York or other areas, according to Scanlon.
Royal Bank of Scotland and RBS Greenwich Capital’s new construction in Stamford, where the companies announced last year they would build 450,000 square feet of space, was the only building that took place.
“As the less expensive sublease space has been absorbed, you’re left with a smaller pool of space,” Scanlon said.
Companies leased 754,002 square feet of Class A space in Fairfield County during the third quarter, versus 569,281 square feet during the second quarter and 560,386 square feet during the third quarter of 2005, according to Albert B. Ashforth. The average asking price has increased to $31.99 per square foot, compared to $31.21 per square foot during the second quarter and $29.52 per square foot last year.
More of the Same
Lots of companies are moving around, and while that does not necessarily mean there is more net absorption, it is keeping the market active, noted Scanlon, who added that she expects to see more of the same during the rest of the year.
“There’s nothing in the crystal ball that says the world is going to change significantly,” she said.
Albert B. Ashforth listed the companies that signed major leases in Fairfield County during the third quarter as Galen Partners, Kelley Drye & Warren, Scionomics, Outdoor Life Network, NYFIX Inc., Philips Dap North America and Towers Perrin’s renewal, all in Stamford; Millennium Partners and HSBC in Greenwich; IMS Health and Webloyalty.com in central Fairfield County; Sikorsky, Cablevision, Prudential and LifeCare Inc. in eastern Fairfield County; and InBev in northern Fairfield County.
W.R. Berkley also signed a lease for 25,642 square feet in the Landmark Square complex in Stamford. And one notable sale that took place in the city last month involved 2777 Summer St., a 7-story office building that was sold by Collins 2777 Summer LLC, an entity controlled by Collins Enterprises, to Triple S 2777 LLC, an entity controlled by Mill Management. CB Richard Ellis brokered the sale, which commanded a price of $20 million, or $180.63 per square foot.
Stamford, a city whose commercial real estate market has faltered in the past, saw its vacancy rate of Class A space decrease from 19 percent in the second quarter to 16.8 percent at the end of the third quarter. Last year during the third quarter, it was 20.4 percent, according to Albert B. Ashforth.
A total of 221,253 square feet of space was leased in the third quarter compared to 218,858 square feet in the second quarter and 167,316 square feet during the same period a year ago.
Available Class A space in the city dropped from about 2.3 million square feet in the second quarter to just over 2 million square feet in the third quarter. A year ago, there was about 2.4 million square feet available.
The average asking price in Stamford increased to $34.61 per square foot in the third quarter from $33.34 per square foot in the second quarter, and from $30.79 per square foot 12 months earlier.
