Investment sales of office properties in Fairfield County have entered a “dormant” phase in 2023, with transaction volume plummeting 83 percent from the previous year.
Brokerage Avison Young reported that the Federal Reserve’s continuing monetary tightening has increased the cost of capital, depressing the investment sales market.
“As cost of capital continues to increase and a further wedge between buyers and sellers exists, office properties in Fairfield County will not transact,” Avison Young predicted in its second-quarter office insights report.
Total investment sales averaged under $22 million in each of the first two quarters of 2023, according to research by Avison Young’s Norwalk office. Over $250 million worth of properties transacted during the fourth quarter of 2021, which represented the 5-year high water mark for transactions by dollar volume.
Remedy Medical Properties’ $15.2 million purchase of 69 Sand PIt Road in Danbury represented the quarter’s largest investment sales transaction.
Lingering high vacancies and sluggish leasing activity contribute to temper demand for office acquisitions. Insurer GenRe inked the quarter’s largest lease for 97,359 square feet at 400 Atlantic St. in Stamford.
Development activity also has taken a pause, with no office deliveries scheduled in 2023.
Amid rising vacancies and a flight to class A high-end offices, approximately 11 million square feet of office space is available, representing a 20.9-percent availability rate countywide. The market now has 15 blocks of space that are larger than 100,000 square feet available, including nearly 468,000 square feet Silicon Harbor’s 1 Elmcroft Road in Stamford.