By: Richard Lee
As Fairfield County's office market limps along for another quarter with a vacancy rate at more than 20 percent, one sprawling vacant complex in Stamford stands out as a property that commercial real estate brokers point to as a key reason.
Recently acquired by Building and Land Technology, a Stamford-based real estate developer, through Lehman Brothers' bankruptcy proceedings, the expansive 614,000-square-foot building has been vacant for nearly three years, spurred by the departure of General Reinsurance Corp., from a 300,000-square-foot space in late 2009.
Gen Re moved to 120 Long Ridge Road, a building owned by Building and Land Technology.
Known as the Financial Centre, the building at 695 E. Main faces Interstate 95, offers an expansive view of Long Island Sound and is within walking distance of the Stamford Transportation Center.
The property is on the market now after much of the interior was gutted, making it ready for fit-out by incoming tenants.
Spokespersons for Building and Land Technology, and Newmark Grubb Knight Frank, which represents the property, declined to comment on the project.
But Building and Land Technology is moving in the right direction in marketing the site, first keying in on a large anchor tenant that would attract smaller businesses, said John Hannigan, a principal in Stamford-based Choyce Peterson, which represents businesses in their search for rental space.
"Many of the floors have been gutted. They want to present a clear view of Long Island Sound when you're touring the building. I think they've done the right things. The landlord will provide tenant improvement dollars toward a build-out," said Hannigan, adding that many owners of vacant Class A office space are improving their properties in the competition to lure tenants.
Noting that there are seven Class A properties in Stamford with at least 100,000 square feet of vacant space, Hannigan said he is heartened by businesses moving to the city from outside the state, including Tronox, Guardian Life, Charter Communications and Tweedy Brown.
But large spaces also need to be filled outside of lower Fairfield County in order to make vacancy rates go down.
There is 233,618 square feet of vacant space at the Matrix Corporate Center and 103,647 square feet at the Ridgebury Corporate Center in Danbury, according to information supplied by Choyce Peterson.
Another 128,132 square feet is vacant at 36 Old Quarry Road in Ridgefield. In Norwalk, there are four buildings each with more than 100,000 square feet of vacant space.
Landlords face the challenge of marketing the property when office leasing activity through the third quarter across Fairfield County was at its lowest level in nearly a decade as businesses opted to remain in their buildings.
Many landlords in 2009 and 2010 desperately wanted to keep their tenants and extended leases that were set to expire in 2011, 2012 and 2013, said Jim Fagan, senior managing director and market leader of Cushman & Wakefield's Fairfield and Westchester County regions, commenting that the county's Class A and Class B leasing activity through the third quarter totaled only 1.45 million square feet, a 19.1 percent decrease from the 1.80 million square feet leased in the first three quarters of 2011.
The year-to-date leasing activity represents the second-lowest year-to-date period in the last 10 years, only surpassing the 1.44 million square feet leased in 2009 through the third quarter, according to Fagan.
But the prospects for 695 E. Main St., and Building and Land Technology's 80-acre Harbor Point project in Stamford, give Fagan a reason for optimism.
"Stamford is being transformed right before our very eyes -- new residential projects are thriving in Stamford's south end, new restaurants are opening, there's the possibility of ferry service to Manhattan, unique venues like Chelsea Piers Connecticut have opened, and our employer base is becoming more diversified with companies like NBC Sports," he said.
The result, Fagan said, is that Stamford is becoming a "cool" place to live and a dynamic workplace.
He also said that the county, particularly Stamford, is benefiting from Gov. Dannel P. Malloy's "First Five" program and its successive efforts to attract and retain business.
"Gov. Malloy is playing a very active role," Fagan said. "Right now, it's a tough slog. We have a lot of space. It's not going to stay like this forever. The jobs will come back."
Brokers at the Stamford office of CBRE Group, which represents the under-used office complex at Harbor Drive, now called Shippan Landing, are hoping the same enthusiasm will stimulate interest in that property.
New owner George Comfort & Sons is breathing new life into the multi-building complex, which is the former sprawling home of a major Time Warner operation, said Paul Jacobs, executive vice president, who is marketing the waterfront property.
The new owner has pumped "multi-millions of dollars" into renovations, including the razing of the former Saltwater Grille to make room for a new entrance to one of the buildings and creation of an expansive view of Long Island Sound, he said.
"There are three buildings that can be made vacant -- 181, 208 and 290," Jacobs said, adding that the complex is about 50 percent occupied. "We can accommodate businesses of 3,500 square feet to upwards of 450,000 square feet."
George Comfort & Sons plans to take advantage of the state tax incentive programs for media-related businesses and the state's First Five program of tax incentives, which has expanded, he said.
Communities like Stamford and Greenwich, with available office space within walking distance of their train stations, continue to be attractive to businesses considering a move out of New York City, where quality office space is becoming scarce, according to James Ritman, managing director of Newmark Grubb Knight Frank's Greenwich office.
"They don't want their employees taking a cab ride or even a shuttle extending their commute," Ritman said.
Jones Lang LaSalle is using that same attribute to lure businesses to 600 Steamboat Road in Greenwich, a 180,000-square-foot structure owned by GRC Realty.
The headquarters of Gen Re before it moved to 695 E. Main St., the building has undergone about $30 million in extensive reconstruction and is welcoming RSR Partners and its 35 employees as its first tenant after a lengthy period of inactivity.
The executive recruiting firm is occupying 9,412 square feet, according to Brian Higgins, managing director at Jones Lang LaSalle, who said space at the reinvigorated 40-year-old building is being offered in the mid-$80s to-$90s-per-square-foot range. Another new tenant is Bessemer Trust, a wealth management and financial planning firm.
"We have a lease out for a 30,000-square-foot tenant that we hope to announce in coming days," Higgins said.
As the economy improves, Higgins is confident that more tenants in the financial services sector will arrive at the building, which has covered parking and is within walking distance of the Greenwich train station.
"It's right next to the Delamar Hotel where people can stay over night and enjoy fine dining," he said.
Continued improvement in the national economy is essential to filling office space in the county, said Robert Ageloff, international director and head of Jones Lang LaSalle's Stamford office.
"Fairfield County's economy continues to lag the minor improvements seen recently in the national economy," he said. "A major obstacle to recovery here is the lack of growth industries in the area -- such as the high-tech and life-sciences sectors. Many of Fairfield County's local economies still rely heavily on the presence of financial services as a driver of growth. Continued economic uncertainty has kept the financial services industry from expanding, which has hindered the ability of local establishments to recover and thrive."