Jon Putnam, Cushman & Wakefield
If only the economy would cooperate, there are signs of improvement in the downtown and suburban Hartford office market. Modest expansion and non-traditional absorption of office buildings is beginning to create shortages of large blocks of office space in certain areas. Places like West Hartford Center, Glastonbury’s Somerset Square area, Corporate Ridge in Rocky Hill, downtown Middletown and downtown Hartford have all seen their best Class A buildings’ occupancy levels grow. Vacancy is being concentrated in buildings that suffer from either age-related challenges, capital issues or buildings that are in an ownership transition.
Unfortunately, although the governor and legislature have taken some positive steps to create economic activity, the state is still mired in a high-tax, high-cost model that is eroding or tempering growth from many of our largest employers and keeping new businesses from entering the market. In spite of that self-inflicted condition, here are the trends that are currently shaping the current office market in Hartford County:
Non-traditional absorption: real estate demand for educational, multi-family residential, medical and government facilities is booming compared to corporate office needs. Offices buildings are being taken out of inventory for conversions to schools, apartments, medical offices and state offices. While some of this activity is traditional direct absorption; like in the case of Saint Joseph College’s School of Pharmacy, which leased 52,000 square feet at 229 Trumbull Street in Hartford or the Art Institute’s new school scheduled to open next year in 32,000 square feet at 100 Great Meadow Road in Wethersfield; the majority of it is not reflected as net absorption because the buildings are taken out of inventory entirely. The biggest transaction of this type was the state’s recent purchase of the 556,000-square-foot 450 Columbus Boulevard in Hartford, which dropped the Hartford CBD class A vacancy rate from 25 percent to 18 percent overnight.
There have been many suburban office buildings leased or purchased for conversion to magnet schools, including 20 Security Drive (Avon), 176 Cumberland Avenue (Wethersfield), 525 Brook Street (Rocky Hill), 10 Targeting Lane and 1101 Kennedy Road (Windsor). In the case where existing buildings haven’t been suitable for conversion, several new school projects and medical centers have fueled new construction, benefiting the architectural-, furniture- and construction-related trades.
Growing popularity of rejuvenated urban centers: there’s no denying that cities, large and small, that have tapped into the “live, work, play” paradigm are enjoying success with multi-use developments that combine housing, offices, retail, entertainment and services in close proximity. Accessible, pedestrian-focused centers with entertainment, food, recreation and other amenities have flourished throughout the country and central Connecticut has a few of its own, both established and developing. New projects like West Hartford’s Blue Back Square or Storrs Center across from UConn’s main campus in rural Storrs and the ongoing transformation of downtown Hartford and Middletown are bringing a new vitality to Connecticut’s Main Street districts.
Several older and struggling class B and C buildings in downtown Hartford are currently getting state subsidies to jump start the financing of conversions to mostly one-bedroom apartments, which is helping to reduce the vacancy in the secondary class B & C market. UConn’s planned conversion and expansion of 10 Prospect Street in downtown Hartford to replace its suburban West Hartford campus will be a major contributor to the vibrancy and diversity of Hartford’s central business district. These new developments in downtown Hartford, along with the small, but rapidly leasing retail project known as Front Street and proposed enhancements of the iQuilt project, all bode well for a future renaissance of Hartford’s city center.
Perhaps as evidence of this trend, Downtown Hartford has been attracting a growing number of tenants that are relocating from the suburbs and some tenants downtown are starting to grow again. There are approximately eight companies (with space needs totaling over 185,000 square feet) from the suburbs that are currently getting proposals, negotiating leases or have recently moved to Hartford’s CBD. For example, CareCentrix leased approximately 40,000 square feet at 20 Church Street in 2012 and just expanded by another 25,000 square feet.
Now if we can just get the Connecticut economic engine to purr again, perhaps the larger home-based corporations would add to the expansion!
— Jon Putnam, executive director, Cushman & Wakefield