Fairfield County office market looks to rebound

Southwestern Connecticut’s office leasing was hit hard by the coronavirus pandemic in 2020, but the market still showed signs of life.

The mixed outlook is detailed in a new report from commercial real estate firm Newmark. While leasing volume plunged last year, Newmark officials argue that major deals brokered in the past few months showed that amid the rise of remote working many corporate tenants still see offices as key to their long-term plans.

“2020 was definitely a challenging year, but there were some bright spots here in Fairfield County,” Newmark research manager Karolina Alexandre said in an interview.

In 2020, Fairfield County’s leasing volume plummeted nearly 25 percent year over year — and to a level 33 percent below its average for the past five years — to a total of about 2.4 million square feet.

“It’s pretty much where we thought things would have been almost a year into this virus,” said James Ritman, a Stamford-based executive vice president at Newmark.

Despite the fall-off, the total still far exceeded the county’s activity during the Great Recession. In 2008, its leasing volume dropped to about 1.5 million square feet and cratered in 2009 at around 1.4 million square feet, before recovering in the following years.

In a sign of stability, the county’s vacancy rate has not changed significantly in the past year. It ended 2020 at 27.6 percent, compared with 26.6 percent at the end of 2019.

“There was space coming online, but most of the space came online prior to the pandemic,” Alexandre said. “We haven’t really seen any major downsizings or consolidations due to the pandemic yet.”

Amid the market’s sluggishness, some companies have signed major deals in the past few months.

As the state’s largest office leasing transaction of 2020, Nuvance Health — a system that includes Danbury, New Milford and Norwalk hospitals — leased 220,000 square feet at The Summit complex at 39 Old Ridgebury Road in Danbury. The agreement also represented the second-largest new lease in Fairfield County since 2017.

In Fairfield County’s next threelargest new leases of last year, Parker Medical signed for 88,000 square feet at 43 Old Ridgebury Road in Danbury, Greenwich Education Group snapped up about 67,000 square feet at 201 High Ridge Road in Stamford and Berkley Insurance Co., agreed to take about 63,000 square feet at the Metro Center complex at 1 Station Place in downtown Stamford.

Many large employers have not yet re-opened their offices. When they do, they are likely to run them differently than they did before the pandemic.

“This giant shift is really around the posture of organizations around flexible work — remote being one of the options,” Elisabeth Joyce, vice president of advisory in the HR practice at Stamford-based consulting and research firm Gartner, said in a recent interview. “It will more likely be a standard part of standard operating procedures in most organizations where you’re allowed to work at home in an alternate location based on the work you do, as opposed to what your manager or organization allows.”

Reflecting that trend, a number of firms have made sweeping changes. Consumer financialservices giant Synchrony last year announced a new policy that allows employees to permanently work from home.

In a related change, Synchrony is planning to reduce its real estate footprint. But it is keeping its Stamford headquarters at 777 Long Ridge Road, near the Merritt Parkway.

“What we heard from employees was just how important it was to them to have the flexibility to manage the work-life balance,” Synchrony President Brian Doubles, who will become the company’s CEO in April, said in a recent interview. “To compete for employees going forward, you have to give employees that flexibility. Our employees are our biggest strength and biggest asset.”

Newmark officials remain hopeful that factors such as the roll-out of COVID-19 vaccines, major companies’ desire to provide offices that are close to employees who live in Fairfield County and prospective tenants’ “pent-up demand” will spur more activity in the coming months.

Among the largest projects underway, WWE confirmed this month that it is moving ahead — at a to-be-announced time — with the relocation of its headquarters within Stamford, from 1241 E. Main St., to the downtown complex at 677 Washington Blvd. In 2019, it signed a lease for about 415,000 square feet at 677 Washington.

“We’re bullish about the next year and about companies being in Fairfield County and tapping into a strong employee base here,” Ritman said.