Downtown Stamford as seen from a platform at the Stamford Transportation Center. (Courtesy Photo / Public Domain / DBen)
With vacancies reaching the highest levels in a generation, Fairfield County’s office market is facing a crossroads in 2019.
Downsizing by financial services companies and the diminishing appeal of suburban single-use office parks have left behind vast expanses of unoccupied space. Although fourth-quarter market statistics are still being compiled, the vacancy rate in downtown Stamford is hovering around 30 percent in a still-sluggish leasing environment, said Jim Fagan, senior managing director at Cushman & Wakefield.
“The whole Fairfield County market is still suffering from a lack of job demand and high vacancies,” Fagan said. “The market has been soft.”
Computerization of financial trading has left the 700,000-square-foot former UBS trading floor and offices at 677 Washington Boulevard vacant since 2016, and GE Capital moved jobs to Norwalk and New York City, leavings behind its former offices at 800 Long Ridge Road in Stamford.
But Fagan sees prospects for a turnaround in 2019, with several factors contributing to a potential stabilization of the market.
The glut of local office space has prompted some developers to pursue conversions to other uses, from medical buildings to multifamily housing. That trend is expected to continue in 2019, removing obsolete office inventory from the market and lowering vacancies.
Several companies with sizable office space requirements are scouting locations in the market, with potential lease deals coming in 2019, Fagan said. He estimated that up to eight transactions for 100,000 square feet or more could be completed next year.
To win those deals, landlords will have to provide amenities that create a vibrant environment.
“Real estate more than ever today is a tool for corporations to attract and retain talent,” Fagan said. “Whenever we talk with corporate real estate managers, the message is the space has to be interesting on the inside.”
As Fairfield County’s largest office cluster, Stamford stands to benefit in 2019 from job search engine Indeed’s expansion, with plans to add 500 jobs at a to-be-determined location in the city. The expansion is aided by a $10 million loan from the state Department of Economic and Community Development, which will be forgiven if Indeed reaches a statewide target of 1,700 employees by 2031.
And Charter Communications is scheduled to occupy a new, 500,000-square-foot headquarters in downtown Stamford next year housing 1,100 employees, after receiving $20 million in tax credits and loans from the state.
