1 Elmcroft Road/Image courtesy of Google Maps

As office leasing activity continued to decline, a multifamily conversion strategy may gain momentum among Fairfield County developers.

Office tenants inked just 263,000 square feet of leases and renewals during the third quarter, CBRE reported, an 18 percent decline from the previous quarter. Average asking rents dropped 2 percent to $35.13 per square foot.

Even the county’s most desirable office addresses weren’t immune to the market decline, with asking rents in the Greenwich central business district dropping 5 percent to $108.80 per square foot, according to CBRE’s third quarter report.

The countywide leasing activity total of 263,000 square feet was the lowest since the fourth quarter of 2021, potentially prompting more developers to take a fresh look at multifamily housing conversions such as Building and Land Technology’s 1 Elmcroft Road in Stamford. The 1985 building was designed by I.M. Pei & Partners and is a former headquarters for Pitney Bowes.

The Stamford developer received final approval in August for the 256-unit project, which removes 457,000 square feet of office inventory from the market. As a result, the countywide office availability rate declined from 27.4 to 26.2 percent, CBRE said.

Continuing a post-pandemic trend, many tenants that have committed to deals upgraded to higher-quality buildings, as class A buildings accounted for 76 percent of leases signed in the third quarter.

Stamford’s central business district was the most active during the third quarter, accounting for nearly 90,000 square feet of leases. Availability rates range from a low of 9.6 percent in downtown Greenwich to a high of 35 percent in Stamford outside of the central business district, a submarket that totals 6.1 million square feet of office space.