Andreas Senie, EAC Propertie

The southern Connecticut retail market experienced a slight improvement in market conditions in the third quarter 2016. The vacancy rate went from 5.5% in the previous quarter to 5.2% in the current quarter. Net absorption was positive 698,522 s/f, and vacant sublease space decreased by (52,256) s/f. Quoted rental rates increased from second quarter 2016 levels, ending at $23.54 per s/f, per year. A total of 20 retail buildings with 220,256 s/f of retail space were delivered to the market in the quarter, with 1,498,156 s/f still under construction at the end of the quarter.

Westchester’s retail vacancy rate decreased in the third quarter 2016, ending the quarter at 5.2%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate, with the rate going from 5.8% in fourth quarter 2015 to 5.5% at the end of the second quarter 2016, to 5.2% in the current quarter.

The largest lease signings occurring in 2016 included the 69,490 s/f renewal signed by Raymour & Flanagan in Waterbury, second largest was 24 Hour Fitness at Post Road Plaza in Orange,  for 37,861 s/f lease, and 25,300 s/f lease signed by Sierra Trading Post at Berkshire Shopping Center in Danbury.

There is a .6% increase in rental rates in the current quarter, and a 1.49% increase from four quarters ago. Sales activity in the second quarter figures fell during the second quarter 2016 in terms of dollar volume compared to first quarter 2016. With 12 retail transactions being completed for a total volume of $96.34 million, on average price per s/f equating to $162.80. First quarter, 14 transactions, totaling $231,352,500, or $156.08 s/f averaged.

Cap rates have been higher in 2016, averaging 8.34% compared to the same period in 2015 when they averaged 6.50%.

Bridgeport markets showed an overall rise in quoted rental rates from $19 SF in 2015 Q1 compared to $22.10 in 2016 Q3. Vacancy rates between 5.8% - 7.9%.

Darien markets showed an equalization in quoted rental rates. Rates trending at $44 in 2015 Q1, significant dip in 2015 Q3 down to $41, and then trending back up for the last two quarters to now trending at $45 s/f.

Fairfield Markets showed an overall increase in rental rates for four consecutive quarters trending at $28.25 s/f in 2015 Q1, currently trending at $28.75. Vacancy rates ranging from 4.7% to 9.4% with overall vacancy declining within the market.

Greenwich quoted rental rates have been on steep rise over the last four quarters trending at $67 in 2015 Q1, now trending at just under $73 s/f in 2016 Q3. Even with two new construction deliveries being positively absorbed into the market did little to slow the increase the rental rate.

Norwalk Markets quoted rental rates show a continued upward trending at $25.50 in 2015 Q1, the market recovering well from the a large absorption of new construction in 2015 Q2. The market currently trending at $26.50. Vacancy percentages ranging from as low as 3.1% upwards 6.5%.

Shelton Markets quoted rental rates have shown continuing downward trend with a correlating upswing in vacancy. 2015 Q1 rates trending at $17.75, with a decrease to $12.25 in 2016 Q3. 

Stamford market has shown tremendous growth over the last four quarters trending at $32.50 in Q1 2015, peaking at $35.75 in Q1 2016, leveling out in Q3 trending at $34.25 SQ FT. Given the extensive newly constructed properties brought to the market a quick look would lead this downward swing in rates to believe that the market is wreaking havoc, but vacancy continues to decline from 2014 3.06% Q4 to 2.2% 2016 Q3.

Trumbull Market has shown considerable rise in vacancy since 2013 going from .040% to 3.56% Q3 2016. A correlating drop in rental rates from $31.75 2015 1Q down to $28 in 2016 Q3.

Westport Markets have had significant movement both in price and availability. 2015 Q1 showing a trending rate of $49.50 with an overall upward swing through 2016 Q2 peaking at $52.75, tapering down to trend at $50.50 Q3 2016.

It is evident the commercial real estate market continues to strengthen here in the northeast.

Andreas Senie is managing partner, broker at EAC Properties, Fairfield, Conn.