🔒Amid broader market struggles, here’s why one developer is building over 100,000 sq. ft. of new office space in this CT town

The pandemic ushered in a work-from-home trend that has caused office building vacancies to soar in many cities and towns, but that doesn’t scare Darien commercial property developer David Genovese.

The CEO of Baywater Properties will grow Darien’s office space footprint by 22% as a result of his mixed-use development called The Corbin District.

The project, which is being built on 7 acres downtown between Interstate 95 and the Darien train station, is about six months into a second phase that will add 105,968 square feet of new class A office space.

Genovese says he’s making a big bet on the office market in one of Connecticut’s wealthiest suburbs because he’s confident that businesses will eventually require workers to return to the office.

“I personally don’t believe that permanent work-from-home workplace strategies work,” he told the Hartford Business Journal. “It’s very hard to mentor young people, it’s very hard to create and sustain culture over time if everyone is distributed and working from home.”

Companies are increasingly pushing employees back into the office post-pandemic. At the same time, some businesses are willing to pay top dollar for new class A space that offers fresh amenities and proximity to restaurants, shops and train stations, Genovese said.

“It’s a much more pleasant pedestrian experience,” he said. “That’s the message we keep hearing from corporate CEOs and real estate decision-makers. They want to give their people a better option.”

Further, the additional office space will increase Darien’s tax revenue without creating a significant draw on municipal resources, Genovese said.

“Office space also creates an employee base downtown, attracting workers who will shop, dine and exercise locally in the stores, restaurants and fitness studios we are incorporating into the project,” he said.

‘Miniature’ Greenwich

Much of the office space Baywater Properties is building in Darien has already been pre-leased.

Tenants have signed on to occupy 72% of the 91,568 square feet of space in an office building under construction at 1 Market St., which is expected to be completed next year. They include investment firms Balance Point Capital Advisors (15,000 square feet), Crestwood Advisors (5,500 square feet) and Janney Montgomery Scott (7,500 square feet); business consulting firm McKinsey & Co. (12,000 square feet); and professional services firm Aon (26,000 square feet).

Notably, McKinsey is relocating from Stamford and will bring with it about 220 employees.

Another small office building on-site will have 14,400 square feet.

Overall, The Corbin District’s $165 million second phase — which began construction last July — will feature 11 new buildings, including the office space, 112 apartment units and 78,810 square feet of retail space.

The $30 million first phase, which was completed in spring 2023, included three mixed-use buildings along Corbin Drive with 38 apartments and about 23,000 square feet of retail space — all of which has been fully leased, Genovese said.

Retail tenants include Bank of America, Barrett Bookstore, Sail to Sable The Cabana, Shoes ‘N’ More, Green & Tonic, Darien Toy Box, among others.

The project’s goal is to create a new town square in a Fairfield County suburb with just over 22,000 residents, and a median household income of $250,000, according to U.S. Census Bureau data.

A recent Bloomberg article highlighting McKinsey’s move to Darien said the town is quickly “becoming a miniature version of nearby Greenwich,” and is looking to attract bankers who want to stop commuting to New York City.

Indeed, a marketing website describes The Corbin District as a place where “New York City meets New England.”

Quality of space

Genovese said the office space was initially offered at $60 per square foot, but high demand has increased asking rents for the remaining available space to $90 per square foot.

That rivals Greenwich’s average asking rent of $91.15 per square foot for class A office space, according to commercial real estate broker Cushman & Wakefield.

Fairfield County’s fourth-quarter average asking rent was $34.37 per square foot, Cushman & Wakefield data shows.

Overall, Darien currently has only a small slice (484,684 square feet) of Fairfield County’s overall office market, but most of that space (nearly 96%) in town is occupied. Fairfield County’s 37.6 million square feet of office space was 29% vacant at the end of the fourth quarter, Cushman & Wakefield data shows.

“The success of the Darien office market is primarily driven by the quality of its office space and its accessibility via the Metro-North rail line,” said Steven Fiore, senior research analyst with Cushman & Wakefield.

Fiore said office tenants today desire modern, high-quality buildings near major transit hubs.

“Needless to say, this aligns with Darien’s offerings,” Fiore said. “In contrast, much of Fairfield County’s office inventory consists of older suburban corporate office parks, which are struggling to compete with current tenant preferences.”

The Corbin District’s class A office space will benefit Darien’s economic development by complementing a downtown that is already class A, said the town’s First Selectman Jon Zagrodzky.

“You walk across the street or across the parking lot to a class A restaurant to entertain colleagues or clients,” Zagrodzky said. “There are class A shops and boutiques, there’s a class A clothing store, a class A ice cream place.”

Another reason Darien’s office space is attractive, Zagrodzky said, is because many of the town’s residents are office workers who no longer want to spend almost an hour in I-95 traffic to get to their employers in Stamford or Greenwich.

“If you leave in the morning from here at 8:15 for a meeting in Greenwich, it’s going to take you 40 minutes in heavy traffic just to get to Greenwich,” he said.

“Frankly, I think a lot of people just said we are sick of that.”

Whether The Corbin District will fully satisfy Darien’s future office space demand remains to be seen, Zagrodzky said.

“I think it’s kind of what the market will bear,” he said. “I don’t know that there are a lot more locations in town where you can put that type of office space, so David is really in a great spot in terms of location and that strategy to create that very attractive office space.”