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Colliers: Improved Office Availability Rates, Less Space Coming to Market Bode Well for Fairfield and Westchester County Markets

| October 11, 2016 | 0 Comments

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Stamford, Conn., Oct. 11, 2016 – Improved availability rates and the deceleration of office space returning to the Fairfield County, Conn., and Westchester County, N.Y., markets during the past three months are positive signs toward improvement, according to Colliers International Group Inc. (NASDAQ:CIGI, TSX:CIG). The global commercial real estate services firm’s Stamford-based research team today released its third-quarter 2016 Office Market Snapshots for the two regions.

FAIRFIELD COUNTY

A significant slowdown of newly available office space in tandem with healthy leasing activity in Fairfield County during the third quarter drove down the overall availability rate to 22.4 percent, which is 170 basis points lower than last year at this time. Large renewals by Priceline.com (68,882 square feet) at 800 Connecticut Ave. in Norwalk and Aon Corp (47,140 square feet) at 1600 Summer St. in Stamford represented the largest third-quarter leasing transactions. Additionally, a consultancy firm signed a new, 34,794-square-foot lease at 1 American Lane in Greenwich.

“Fairfield County office tenants held onto their space during the third quarter, in a reversal of an established trend toward space being returned to the market,” said Jeffrey Williams, executive managing director and market leader. “We see this as a possible indicator of future improvement.”

Asking office lease rates continued to grow modestly in Fairfield County, improving 3.4 percent year over year to $35.52 per-square-foot currently.

Submarket highlights:

  • Fundamentals showed improvement across the board in the Eastern Fairfield submarket during the third quarter, as the availability rate continued to step down. At 19.0 percent, the current rate represents a 250-basis-point improvement over the recent peak of 21.5 percent reached during third-quarter 2015.
  • The Central Fairfield submarket achieved the highest leasing activity total in the county during the past three months. Renewals represented just over 40.0 percent of that volume, which resulted in the availability rate ticking only slightly lower, to 23.3 percent.
  • Renowned for its cluster of financial services companies, specifically hedge funds, Greenwich unexpectedly experienced a surge of leasing from the health care sector during the third quarter. This included Stamford Hospital’s 31,362-square-foot commitment at 75 Holly Hill Lane.
  • Leasing activity in Stamford’s Non-CBD submarket exceeded the normally more popular CBD submarket, however both saw their availability rates descend. Occupiers mostly sought Class A space in the CBD, whereas Non-CBD tenants were more cost conscious, with the majority choosing Class B properties.
  • The Northern submarket continued to enjoy the lowest availability rate in Fairfield County, shrinking to 15.8 percent during the third quarter, a level not seen since the end of 2008. However, the average asking lease softened slightly, to $24.01 per square foot.

 

WESTCHESTER COUNTY

“It was a particularly quiet summer in Westchester County, but a positive one nonetheless,” said Sean Cullen, director of research for Colliers’ Stamford office. “Office leasing activity was at its lowest level in two years, but even less new space came onto the market.”

This helped push down the availability rate 60 basis points from last quarter, to 21.1 percent. Asking lease rates have appreciated slightly to $27.51 per square foot but remain essentially unchanged compared to year-end 2015.

The quarter’s three largest office lease transactions all involved renewals. In White Plains, Greenberg Traurig re-committed to 26,356 square feet at 445 Hamilton Ave., while Kurzman Eisenberg Corbin & Lever LLP renewed and expanded its operation to 24,241 square feet at 1 N. Broadway. Additionally, Mariner Investment Group renewed its 23,868-square-foot lease at 500 Mamaroneck Ave. in Harrison.

Submarket Highlights:

  • After peaking in 2015, the office availability rate in Northern Westchester continued its reverse course settling at 23.2 percent, which is a 50-basis-point decrease from last quarter. If this trend continues, it will end five years of annual increases.
  • The Southern Westchester submarket offers some of the lowest office asking lease rates in Westchester County, but this was not enough to entice tenants during the third quarter. The availability rate jumped to 14.4 percent from 13.6 percent but is still the lowest rate in the county.
  • East I-287 occupiers chose Class A space during the third quarter, accounting for 87.3 percent of all activity and pushing the availability rate down to 19.2 percent. The financial services sector was the primary driver, as illustrated by the aforementioned Mariner Investment Group lease.
  • Asking lease rates continued to rebound in West I-287, reaching $25.14 per square foot. At the same time, the office availability rate swelled to 24.0 percent, 170 bps higher than last quarter, primarily due to 70,000 square feet being added at 100 Hillside Ave. in White Plains.
  • Office leasing activity in the White Plains CBD ended the quarter at just under 130,000 square feet, about 13.0 percent less than last quarter, but still 30.0 percent higher than the five-year average. Still, the availability rate inched up 20 basis points from last quarter, to 23.9 percent.

— End —

About Colliers International Group

Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more than any other real estate services firm.

For the latest news from Colliers, visit Colliers.com or follow us on Twitter: @Colliers and LinkedIn. To see the latest news on Colliers International in New York, follow @Colliers_NYC and Twitter.

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