Business & Tech

Local Market Bucks Commercial Vacancy Trend

Countywide commercial real estate market forecast remains dim, but New Canaan/Darien market brightens.

While the commercial real estate market continued to soften elsewhere in Fairfield County in the third quarter, more office space was actually filled locally, according to a new report by real estate firm Cushman & Wakefield.

The vacancy rate in the New Canaan/Darien submarket dropped to 11.9 percent from 14.3 percent last quarter. Meanwhile the vacancy rate in the Wilton/Westport submarket rose to 15.9 percent from 12.6 percent; in Greenwich the rate was up nearly a point to 18.5 percent; and in the Stamford Central Business District vacancies jumped almost five points to 23.4 percent (due largely to Gen Re and remaining subtenants moving out of 509,000 square feet at 695 East Main Street).

Cushman & Wakefield analyst Jim Fagan says vacancy rates in New Canaan were as low as 6 percent in 2007, compared to a low of about 11 percent in Stamford.

Countywide the vacancy rates were up six full points to 19.9 percent from 13.9 percent a year ago. Fagan attributes the trend to the continuing rise in unemployment.

"If you lose four jobs, theoretically you need a thousand feet less," Fagan said, predicting that as joblessness rises the vacancy rates in Fairfield County will go still higher over the next year or so.

But he says the bad economy may in fact be boosting the commercial real estate market locally. He speculates that New Canaan residents are deciding to forego corporate employment and setting up shop on their own in town.

The vacancy rates elsewhere in the area are nonetheless driving down office space rents here, and Fagan predicts the decline will continue for the next six to 12 months.

Published rents are now averaging about $34 per square foot in New Canaan as prices slipped across Fairfield County in the third quarter. Class-A space averaged $35.68 per square foot, down significantly from the $36.72 average last quarter and $36.23 at the same time last year.

Landlords are making further concessions to tenants, cutting rents by as much as 15 to 30 percent, and in some cases offering free rents or higher work allowances.

Fagan sees the lower rents as a silver lining.

"It's an opportunity for people to do real estate deals at prices that haven't been seen in a long time," he said.


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here