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Colliers International Reports Office Rebound in Fairfield County, Incremental Improvement in Westch
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STAMFORD, Conn., July 29, 2016 - Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) today released its mid-year 2016 Office Market Snapshots for Fairfield County, Conn., and Westchester County, N.Y. The global commercial real estate services firm's research findings show that, after a shaky start to the year, Fairfield County has rebounded to historic norms while Westchester County fundamentals show incremental improvement.
FAIRFIELD COUNTY
"Office leasing in Fairfield County surged in the second quarter, to 958,572 square feet, which is nearly double the first-quarter total," noted Jeffrey Williams, executive managing director and market leader. "Activity was driven primarily by new leases, signifying a return of confidence."
Among the quarter's largest new leases, Charter Communications committed to 73,564 square feet at 400 Atlantic Street in Stamford, Wells Fargo took 71,272 square feet at 83 Wooster Heights in Danbury and Crius Energy leased 45,481 square feet at 535 Connecticut Avenue in Norwalk. Notable Fairfield County renewals involved Synapse Group (57,135 square feet) and Citibank (54,130 square feet).
As a result of this increased activity, the availability rate dipped 20 basis points to 23.1 percent, which is 150 basis points lower than at mid-year 2015. Asking lease rates have increased by more than $1.00 per square foot year-over-year.
Submarket highlights:
• Fairfield County's Eastern submarket continued to steadily improve. The availability rate has dipped 150 basis points year over year, to 19.8 percent - a level not seen since third quarter 2014. Leasing activity increased by almost 50.0 percent since last quarter.
• Despite a strong recovery in the Central submarket's leasing activity, the availability rate has ticked up by 160 basis points since the first quarter. This is largely due to space coming onto the market at a single office complex in Wilton.
• The Greenwich submarket continues to be one of the strongest performing in Fairfield County, particularly among Class A properties. Strong demand from the FIRE sector drove the availability rate down to 17.0 percent, the lowest rate in over five years.
• Although there was a slight uptick in Stamford CBD's total availability rate from last quarter, primarily due to an increase in new sublease space, it still has decreased 370 basis points year-over-year. Stamford Non-CBD's total availability rate dropped 100 basis points compared to last quarter.
• With an availability rate at 16.1 percent, a level not seen since first quarter 2009, the Northern submarket experienced an impressive quarter. Leasing activity topped 118,000 square feet, with more than half of the activity attributed to the Wells Fargo lease in Danbury.
WESTCHESTER COUNTY
In Westchester County, leasing activity held steady during the second quarter, totaling 617,174 square feet. The largest transaction involved Atlas Air Worldwide Holdings' 120,000-square-foot renewal at 2000 Westchester Avenue in Purchase. The largest new lease involved New York State Insurance Fund committing to 33,894 square feet at 44 South Broadway in White Plains. Other notable Westchester county deals included an expansion by REIS Reports (30,000 square feet), a renewal by Montefiore Medical Center (28,430 square feet) and a renewal by Cuddy & Feder LLP (26,365 square feet).
Tenant demand brought down the availability rate 20 basis points, to 21.7 percent. Asking rental rates rebounded somewhat after a first-quarter decline, reaching $27.39 per square foot by the end of June.
"This increase would have been more pronounced had it not been for the Northern and Southern submarkets, which experienced slight drops in asking prices," said Sean Cullen, director of research for Colliers' Stamford office. "The three remaining submarkets all experienced healthy asking rate increases during the past three months."
Submarket Highlights:
• After an unusually strong first quarter, the Northern Westchester submarket returned to its historical norms. Leasing activity amounted to 73,141 square feet, a 43.3 percent drop from last quarter, but a 59.4 percent increase year over year.
• In the Southern submarket, leasing activity jumped to 49,618 square feet from 2,314 square feet in the first quarter, which improved the availability rate 30 basis points. However, Montefiore's renewal in Yonkers accounted for 57 percent of this activity.
• East I-287 tenants in Class A buildings renewed at a heightened pace during the second quarter, accounting for 50 percent of all activity there. The largest of these renewals was the aforementioned Atlas Air Worldwide Holdings commitment.
• West I-287 tenants that signed leases sought value during the second quarter, with a majority committing at Class B properties. Net absorption was sufficiently positive to decrease the availability 50 basis points, to 22.3 percent, breaking the streak of five consecutive quarters of negative absorption.
• Leasing acti