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STAMFORD, Conn., July 18, 2017 – Colliers International Group Inc. (NASDAQ:CIGI, TSX:CIG) today released its second-quarter 2017 Office Market Snapshots for Westchester and Fairfield counties. The global commercial real estate services firm’s Stamford-based research team reports a solid quarter in Westchester despite an increase in availability rates, and relatively flat trending in Fairfield office fundamentals.
WESTCHESTER COUNTY
“The official marketing of IBM’s 1-million-square-foot former HQ in Somers, New York, hurt what would have otherwise been a solid quarter for Westchester’s office market,” said Jeffrey Williams, Executive Managing Director | Market Leader. “The quarter ended with 723,799 square feet being leased, which was 26.5 percent higher than the trailing five-year quarterly average. However, the availability rate still climbed 240 basis points from last quarter to 22.0 percent.” Owner confidence in the market helped push asking rental rates up 1.9 percent from last year, to a current $27.90 per square foot.
Submarket highlights:
- The Northern submarket appeared to have stabilized over the past two years, with the availability rate hovering around 25.0 percent. However, the rate jumped to 36.4 percent in the second quarter due to the marketing of IBM’s former HQ. Although healthcare occupiers like Ascensia Diabetes Care, which recently inked 65,000 square feet at 100 Summit Lake, continue to be attracted to the highly educated workforce, the submarket is likely to continue to be impacted by a growing preference for urban environments.
- In the Southern submarket, residential developers have flocked to the mini-cities of New Rochelle and Yonkers, among others. Owners of office properties should benefit from their proximity to a fresh talent pool, and the increase of 11.4 percent in average asking rents since this time last year is proof of their confidence.
- Leasing activity in the East I-287 submarket was relatively average at 161,041 square feet, but new availabilities were extremely limited. This helped push down the availability rate by 60 basis points to 17.0 percent, the lowest rate since the fourth quarter of 2006. The largest transaction was Milber Makris Plousadis & Seiden leasing 29,573 square feet at 709 Westchester Avenue.
- The availability rate in the West I-287 submarket increased by 80 basis points to 24.0 percent during an otherwise quiet quarter. This was due primarily to the marketing of Danone’s former space at 100 Hillside Avenue. The firm recently signed a new lease for mixed-use space in the White Plains CBD.
- The White Plains CBD followed its strong first-quarter performance with another in the second. Three out of the top five leases in Westchester were signed here, the largest being Sumitomo’s 101,411-square-foot lease at 1 N. Lexington Avenue. The availability rate of 17.8 percent is the lowest since the third quarter of 2006, resulting in a year-over-year jump of 5.8 percent in asking lease rates to $33.89 per square foot.
FAIRFIELD COUNTY
The office market experienced some wins and losses in the second quarter, resulting in a relatively flat quarter overall. With 827,146 square feet in transactions, leasing activity came in just 2.5 percent lower than the trailing five-year quarterly average of 827,146 square feet.
“Significant new blocks of available space were limited, but there were enough to counteract most new leasing activity,” said Sean Cullen, Director of Research for Colliers’ Stamford office. “Consequently, the availability rate remained unchanged from last quarter. Asking rental rates were somewhat improved, rising 1.8 percent to $35.88 per square foot from last quarter.”
Submarket highlights:
- Despite Unilever’s decision to market their space at 75 Merritt Boulevard, adding nearly 100,000 square feet to market, availability in the Eastern submarket climbed just 10 basis points to 18.5 percent. This was due to a number of smaller companies entering the market, along with several existing occupiers.
- Although most Central submarket fundamentals appear to have stabilized since last quarter, second quarter leasing activity was weak. Half of the 113,185 square feet recorded was due to AIG’s renewal at 50 Danbury Road. Availability remains unchanged, but asking rates increased 2.5 percent to $30.91 per square foot after falling almost 7.0 percent in the first quarter.
- The Greenwich submarket was one of the best performing submarkets in second quarter. The availability rate fell 150 basis points quarter-over-quarter to 22.4 percent, and asking lease rates climbed 3.3 percent from last quarter to $65.73 per square foot. Blue Sky Studios signed the largest lease this quarter, renewing until 2025 for 146,795 square feet at 1 American Lane.
- Although Stamford’s Non-CBD submarket had four out the five largest leases this quarter, the availability rate rose 40 basis points from last quarter to 25.6 percent. The marketing of Starwood’s former HQ was a blow to the Stamford CBD submarket last quarter, but there has been significant demand with two of the top five lease transactions signing there.
- In the Northern submarket, the reinvention and development that has taken place in cities such as Danbury and Brookfield has not yet had an impact on the office market. Leasing activity remained extremely limited and asking lease rates continued to trend downward, dropping 1.5 percent to $23.80 per square foot.
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Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.
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