Overall average asking rental rates stabilize, overall vacancy rates decrease in both office markets
STAMFORD, CT – January 20, 2011 – (RealEstateRama) — Jones Lang LaSalle announced that the recovery of the Fairfield County, Conn., commercial office market picked up steam in the final quarter of 2010. Meanwhile, job growth continued to fuel improving fundamentals in Westchester County, N.Y. Strong leasing activity in both office markets helped stabilize overall average asking rental rates and fuel overall vacancy rate decreases.
Fairfield County
“The vast improvement in leasing activity throughout the year may help to alleviate fears regarding the stability of the local office market,” said Robert Ageloff, international director and head of Jones Lang LaSalle’s Stamford office. “Given the recent improvement in office market fundamentals and a more positive overall economic outlook, it is likely the office market will continue to achieve a more balanced state during the next 12 months.”
The ramp up in leasing activity throughout the Fairfield County office market helped drive down overall and Class A vacancy rates. The county’s overall vacancy rate dropped to 22.7 percent in the fourth quarter of 2010, falling 2.2 percent from the overall vacancy rate of 23.2 percent in the third quarter of 2010. The Class A vacancy rate decreased to 22.1 percent this quarter, a drop of 2.6 percent from the Class A vacancy rate of 22.7 percent in the previous quarter. Fairfield County’s Class B vacancy rate increased slightly to 25 percent at year-end 2010, a rise of less than 1 percent from the Class B vacancy rate of 24.9 percent in the third quarter of 2010.
Healthy deal volume in Fairfield County also pushed up average asking rental rates by a small amount in all property classes this quarter. Class A rents increased to $35.78 per square foot in the fourth quarter of 2010, rising less than 1 percent from Class A rates of $35.69 per square foot in the third quarter of 2010. Class B rents grew to $21.86 per square foot this quarter, expanding by less than 1 percent from Class B rates of $21.84 per square foot the previous quarter.
Leasing activity in Fairfield County totaled more than 1.1 million square feet in the final quarter of 2010, marking the third consecutive quarter the county has reported at least 1 million square feet in deal volume.
The Stamford CBD/Railroad submarket saw vacancy rates for Class A buildings fall by a significant amount while posting an increase in vacancy rates for Class B property. The overall vacancy rate decreased to 22.7 percent in the fourth quarter of 2010, a drop of 7.7 percent from the overall vacancy rate of 24.6 percent in the third quarter of 2010. The submarket’s Class A vacancy rate decreased to 23.1 percent this quarter, dropping 8.3 percent from the Class A vacancy rate of 25.2 percent in the previous quarter. The Class B vacancy rate increased to 13.7 percent at year-end 2010, rising 6.2 percent from the Class B vacancy rate of 12.9 percent in the third quarter.
Class A rents in the Stamford CBD/Railroad submarket fell to $43.11 per square foot in the fourth quarter of 2010, dropping less than 1 percent from Class A rates of $43.18 per square foot in the third quarter of 2010. The area’s Class B rents decreased to $27.44 per square foot this quarter, increasing less than 1 percent from Class B rates of $27.47 per square foot in the previous quarter.
The Greenwich CBD/Railroad submarket also recorded a decrease in Class A vacancy rates and rising Class B vacancy rates. The overall vacancy rate slipped to 19.8 percent in the fourth quarter of 2010, a decrease of 3.9 percent from the overall vacancy rate of 20.6 percent in the third quarter of 2010. The Class A vacancy rate fell to 20.6 percent this quarter, dropping 6.8 percent from the Class A vacancy rate of 22.1 percent in the previous quarter. The submarket’s Class B vacancy rate increased to 17.6 percent at year-end 2010, rising 8 percent from the Class B vacancy rate of 16.3 percent in the third quarter.
Class A rents in the Greenwich CBD/Railroad submarket increased to $91.65 per square foot in the fourth quarter of 2010, rising 1.2 percent from Class A rates of $90.60 per square foot in the third quarter of 2010. The area’s Class B rates rose to $62.18 per square foot this quarter, increasing nearly 1 percent from Class B rates of $61.64 per square foot in the previous quarter.
Westchester County
“During the first three quarters of the year, the bulk of leasing activity was in the form of renewals, but by the fourth quarter, leasing showed a greater number of new transactions,” said Ageloff. “Moreover, four of the year’s top 10 leases of more than 15,000 square feet closed in the fourth quarter. Demand was evenly distributed between health services, financial services, professional and business services, and legal services, indicating a more widespread rebound among industry sectors.”
Significant leasing activity in the final quarter of 2010 drove down vacancy rates across Westchester County. The overall vacancy rate fell to 19 percent in the fourth quarter of 2010, dropping 2.6 percent from the overall vacancy rate of 19.5 percent in the third quarter of 2010. The county’s Class A vacancy rate fell to 20.9 percent this quarter, dropping 3.7 percent from the Class A vacancy rate of 21.7 percent in the previous quarter. The Class B vacancy rate dropped slightly to 14 percent at year-end 2010, falling less than 1 percent from the Class B vacancy rate of 14.1 percent in the third quarter of 2010.
Class A average asking rental rates in Westchester County fell slightly to $27.04 per square foot in the fourth quarter of 2010, dropping less than one percent from Class A rates of $27.07 per square foot in the third quarter of 2010. Class B rents increased to $22.23 per square foot this quarter, rising 1 percent from Class B rents of $22.01 per square foot in the previous quarter.
Westchester County leasing activity totaled more than 400,000 square feet in the final quarter of the year, bringing year-to-date leasing activity to 1.6 million square feet.
Although the White Plains CBD saw vacancy rates rise for high-end buildings at year-end 2010, the increase was offset by a drop in vacancy rates for the submarket’s Class B product. The overall vacancy rate remained unchanged at 19.2 percent in the fourth quarter of 2010. The CBD’s Class A vacancy rate increased slightly to 19.3 percent this quarter, rising less than 1 percent from the Class A vacancy rate of 19.2 percent in the third quarter of 2010. The Class B vacancy rate fell to 18.6 percent in the final quarter of the year, dropping 2.1 percent from the Class B vacancy rate of 19 percent in the third quarter of 2010.
Class A rents in the White Plains CBD dropped to $29.97 per square foot in the fourth quarter of 2010, falling 2.9 percent from Class A rents of $30.88 per square foot in the third quarter of 2010. Class B rents rose to $23.82 per square foot this quarter, increasing 1.3 percent from Class B rents of $23.51 per square foot the previous quarter. Office buildings along the I-287 West Corridor also posted rising vacancy rates for Class A properties and a slight decrease in vacancy rates for Class B buildings. The overall vacancy rate increased to 20.3 percent in the fourth quarter of 2010, a rise of 9.6 percent from the overall vacancy rate of 19.1 percent in the third quarter of 2010. The Class A vacancy rate rose to 22.9 percent this quarter, increasing 9.6 percent from the Class A vacancy rate of 20.9 percent in the previous quarter. The Class B vacancy rate in the I-287 West Corridor slipped to 15.7 percent in the final quarter of the year, decreasing 1.3 percent from the Class B vacancy rate of 15.9 percent in the third quarter of 2010.
Class A rents in the I-287 West submarket rose slightly to $25.06 per square foot in the fourth quarter of 2010, increasing less than 1 percent from Class A rents of $24.91 per square foot in the third quarter of 2010. Class B rents fell to $20.21 per square foot this quarter, decreasing 2.4 percent from Class B rates of $20.71 per square foot the previous quarter.
Jones Lang LaSalle is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, facilities management, consulting, and project and development services. In 2009, the New York tri-state team completed approximately 21 million square feet in lease transactions, concluded property sales transactions valued at more than $1.75 billion, managed projects valued at more than $4 billion, and oversaw a property and facilities management portfolio of 76 million square feet.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.6 billion square feet worldwide. In the New York tri-state area, Jones Lang LaSalle provides leasing and management services for more than 94 million square feet of commercial real estate on behalf of owners and occupiers in the region. For further information, please visit our website, www.joneslanglasalle.com.
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