The former Pitney Bowes headquarters in Stamford will be converted into 256 apartments in a project by Building and Land Technology. Photo courtesy of Building and Land Technology
A looming wave of office-to-residential property teardowns and conversions is reshaping the Fairfield County office market and removing out-of-favor properties from the inventory.
Brokerage Colliers is tracking more than 2.6 million square feet of conversions in permitting or approved throughout the county, where the office vacancy rate stood at 22.6 percent at mid-year.
The housing conversion trend could help stabilize the market, in which the post-COVID trend toward smaller office leases has depressed occupancy and rents.
“The traditional office building doesn’t lend itself well to residential conversions, and some of these buildings are a little bit dated,” said Lars Remole, senior research analyst in Colliers’ Stamford office. “They have to be torn down and rebuilt from scratch.”
In 2023, Stamford-based developer Building and Land Technology received approval to convert the former Pitney Bowes headquarters at 100 Elmcroft Road into 256 apartments. Before the COVID-19 outbreak, BLT attempted to reposition the building for tech industry tenants, rebranding it as “Silicon Harbor” in 2016.
About five miles inland at 800 Long Ridge Road in Stamford, BLT received Planning Board approval in March to demolish the former Xerox Corp. headquarters and develop 354 housing units.
In Darien, Dallas-based Trammell Crow Co. is seeking to rezone Thorndal Circle office park and build 175 apartments on an 11-acre site between Hecker Avenue and Interstate 95. The existing five office buildings would be demolished.
And in Greenwich, New York-based developer Tishman Speyer is seeking to build 198 townhouses at 1 American Lane, a two-building office park known as Greenwich American Center.
The project would serve an “unmet middle market demand” between entry-level housing priced below $1 million and luxury housing in the over $3 million category, according to a market study presented to the Planning & Zoning Commision by The Marketing Directors, a New York-based consultant to Tishman Speyer.
The median single-family home price in Greenwich was nearly $2.4 million during the first seven months of 2024, according to data compiled by The Warren Group, publisher of The Commercial Record. The median condominium price was nearly $1.1 million over the same period.
Reinvestment Vs. Redevelopment
Some landlords have opted to double down on office use by reinvesting in updated common area amenities such as cafeterias, gyms and outdoor seating and grilling areas.
AM Properties recently completed a $50 million capital improvement project at 200 Elm St. and 695 East Main St. in Stamford, a pair of connected office buildings totaling 557,000 square feet known as The Link at Stamford.
But others’ decision to pivot to multifamily housing reflects the limited recent demand for sprawling office complexes designed for single or multitenant use.
Average asking rents for office space in Fairfield County declined 2.4 percent over the past 12 months to $31.88 per square foot, according to Colliers. During the same period, the availability rate has declined from 24.4 percent to 22.6 percent.
Landlords are offering a variety of incentives in a market where tenants have the upper hand, including free rent, generous tenant improvement allowances, said Robert Lella, a Colliers senior vice president.
“We are still seeing those tenant improvement packages be pretty favorable to tenants. It’s a competitive market, and you’ve got to push tenants to your building,” he said.
Countywide leasing activity during the second quarter topped 980,000 square feet, more than triple the total in the previous quarter and more than double the square-footage leased during the same period in 2023.
But absorption – the measure of total occupied space – failed to keep pace, growing by only 140,000 square feet. The figure includes expiring leases that were not renewed, and a significant portion of tenants that downsized when signing new leases.
As leases expire, many companies have been forced to make decisions about their long-term space needs for the first time since the widespread adoption of hybrid workplace policies.
“A lot of the companies waited out COVID and now they are having to make a decision because their leases are coming to term,” Remole said. “They are making decisions, and they are generally going toward the nicer spaces that are centrally located: central business districts and close to transportation hubs.”
