2019 BUILDING OUTLOOK Property owners aim to fill office vacancies
A number of the largest office properties in Greenwich and Stamford are grappling with gaping vacancies — as they did a year ago. But the outlook for some has changed significantly in the past 12 months.
Two downtown properties reflect this shift: 677 Washington Blvd., Stamford’s largest office vacancy, and 100 W. Putnam Ave., which contains central Greenwich’s largest available block of contiguous office space. More than $200 million in combined investments in the properties, several corporate arrivals and plans for major renovations have bolstered their leasing prospects.
“This building (at 677 Washington) is a marquee property in Stamford due to its location next to the Stamford Transportation Center,” said Thomas Madden, Stamford’s economic development director. “I expect that you will see interest from companies that are looking to expand and attract the New York City workforce to Stamford.”
New owners
The 700,000-square-foot structure at 677 Washington has stood empty since 2016, when investment-banking giant UBS moved its downsized local operations across the street to 600 Washington Blvd., which also houses offices for Royal Bank of Scotland. The football field-like annex of 677 Washington once housed the world’s largest trading floor, when UBS operated there.
In December 2017, Beverly Hills, Calif.-based real estate investment firm AVG Partners paid $33 million to buy the land at 677 Washington. Eight months earlier, AVG acquired the property’s troubled mortgage for $54 million.
The mortgage purchase compared with a $146 million loan balance, according to data from mortgagetracking firm Trepp. Originated in 2004 with a balance of about $230 million, the property note had fallen into default when it failed to pay off by its maturity date in October 2016, according to Trepp.
Reflecting the building’s struggles, 677 Washington’s appraised value had plummeted in early 2017 to about $37 million.
The idleness of 677 Washington contributes to a vacancy rate of about 30 percent in the city’s central business district, according to several commercial real estate firms.
About 5 miles away in central Greenwich, 100 W. Putnam Ave. was sold last month for about $130 million, in the town’s largest commercial-building sale of the year.
Boston-based Rockpoint Group bought the 150,000square-foot property, which includes two connected towers and two stand-alone buildings.
About 45,000 square feet are vacant, with two entirely empty 15,000-square-foot floors. Those spaces represent the largest adjoined offices available in downtown Greenwich.
“It’s a high-quality asset in the downtown Greenwich market,” said Steven Greenbush, Stamford-based senior vice president with commercial real estate firm CBRE, the property’s leasing agent.
The town’s overall vacancy rate runs at 14 percent, according to CBRE.
Improving outlook
The two properties face a local market that has still not fully recovered from the Great Recession.
While unemployment has plunged to near-record lows — the state’s jobless rate is 4.1 percent — corporate tenants are taking smaller footprints on average, as they favor more shared workspaces and fewer corner offices.
But demand is growing for downtown addresses. Architectural firm Perkins Eastman recently moved into ground-floor offices at 677 Washington.
The property scored another coup when professional-services firm KPMG announced in July that it would move its Stamford offices there, from 3001 Summer St. The company employs more than 300 in Stamford and plans to add 110 jobs in the city during the next five years.
KPMG is renovating the new offices, ahead of a move-in to the fourth floor by next spring or early summer.
The company has declined to specify how much space it would take, but several real estate firms have reported the footprint at about 40,000 square feet.
“It’s a great location because it’s close to mass transit and the growing downtown area — really ideal for both our clients and our people,” said KPMG spokesman W. Scott Horne. “We’re excited about the move.”
The state Department of Economic and Community Development is supporting the relocation with a $3 million grant.
In the meantime, AVG and co-owner George Comfort & Sons are making major improvements, including a new entrance, lobby and café in 677 Washington’s 14-story tower, according to a spokeswoman for George Comfort & Sons.
Early next year, the owners plan to build out a new conference center, new cafeteria and new gym as well as landscape the grounds.
CBRE’s Greenbush said he expected the new owners of 100 W. Putnam to soon launch their own renovations to help recruit tenants.
The current 100 W. Putnam occupants largely focus on finance, with a lineup that includes Alinda Capital, AnchorOak Holdings, AXA Investment Managers, Prentice Capital Management and SVPGlobal.
“We’re looking for very high-end tenants to join our current tenants,” Greenbush said. “We think having additional, notable financial-service tenants would be an asset.”