Watchmaker Timex Group recently leased 50,216 square feet at 6 Armstrong Park in Shelton for its new headquarters. The property is owned by Windsor Management of New York. Photo courtesy of Coldwell Banker
Fairfield County’s office sector showed positive indicators in the first quarter as the effects of residential conversions removed out-of-favor inventory from the market.
The county-wide availability rate declined 0.5 percent to 25.4 percent, CBRE reported, while the market tallied 505,910 square feet of positive absorption. Availabilities have dropped 2.8 percent in the past year.
Lease expiration-driven relocations represent a large portion of recent activity, said David Block, an executive vice president at CBRE’s Stamford office. Many tenants continue to downsize as they consolidate and relocate to take advantage of the tenant-friendly market, Block said.
“As the leases expire, they are trying to bring people back to the office and have continued to downsize, but also upgrade their corporate facilities,” Block said. “While we’ve seen many tenants downsize from 20 to 60 percent, they’ve also focused on higher-rent class A buildings and the flight to quality.”
Properties such as 400 Atlantic St. in Stamford have generated leasing momentum after landlords invested in renovations and amenities updates. In January, insurance giant Gen Re leased 97,000 square feet at the downtown Stamford office building, located a block from the Stamford Metro-North and Amtrak train station. The insurance giant is leaving behind more than 300,000 square feet at 120 Long Ridge Road, its home since 2008.
Average asking rents rose 2 percent on a quarter-over-quarter basis to $36.19 per square foot. Total leasing activity declined 7 percent from the previous quarter to 433,000 square feet, but has remained above 400,000 square feet for four consecutive quarters, CBRE reported.
Downtown Greenwich continues to garner the highest asking rents of nearly $111 per square foot, up 3 percent from the previous quarter, and the county’s lowest availability rate of 9 percent.
Economic uncertainty driven by the Trump administration’s new tariffs may be adding a new element of uncertainty to office transactions, with a slight downturn in building tours in the past 30 days, Block said.
More Opportunities Seen for Housing Conversions
Tenants continue to gravitate to urban locations near public transit at the expense of suburban office parks.
“As the market has changed and tenants have focused on central business district locations with the amenities those areas provide, those large corporate facilities have been somewhat unleasable,” Block said.
Changes of use to multifamily housing are the most popular option for out-of-favor suburban office properties.
CBRE is tracking approximately 1 million square feet of office space being repositioned countywide, while a recent report by brokerage JLL counted 700,000 square feet of class B offices removed from the inventory through residential conversions.
In February, the Wilton Planning and Zoning Commission gave Toll Brothers approval to build a 208-unit apartment complex replacing the 82,000 square-foot office building at 15 Old Danbury Road that nonprofit asset manager Commonfund currently occupies. Commonfund signed a 40,000 square-foot lease at 601 Merritt 7 in Norwalk.
More conversion opportunities are available in Stamford, where Brookings and architects Gensler analyzed underutilized office buildings and their suitability for repurposing housing. The study found 18 properties suitable for conversions creating more than 3,500 housing units.
Multifamily rents in Stamford have increased 4.6 percent since 2020 to $3.47 per square foot, according to the report. Even with more than 4,400 units completed since 2018, vacancy rates are at a decade-long low of 5 percent, indicating strong demand for additional housing.
But political obstacles remain high to approval of additional projects, the report stated, and neither Stamford nor the state of Connecticut currently offer financial incentives for office-to-residential conversions.
