Significant 1Q12 Lease Transactions
Property Tenant Square Feet
129 Worthington Ridge Rd., Berlin Fosdick Fulfillment Corp. 250,734
71 Horizon Dr., Bristol Versatile Processing Group W/D 60,360
Significant 1Q12 Sale Transactions
Property Buyer Purchase Price / $PSF Square Feet
61 Chapel Rd., Raymour & Flanigan Manchester Furniture $16,000,000 / $52.00 psf 307,738
10 New Britain Ave., Plainville General Electric Co. $2,250,000 / $12.43 psf 180,996
1838 New Britain Ave., JHB Holdings Farmington Real Estate CT $1,280,000 / $25.60 psf 50,000
Significant 1Q12 Construction Completions
Property Major Tenant Completion Date Square Feet
15 Bradley Park Road, East Granby All State Corp. 1Q12 40,000
Significant Projects Under Construction
Project Major Tenant Completion Date Square Feet
Sullivan Avenue FedEx, South Windsor FedEx 3Q13 220,000
The construction of the new FedEx distribution center in South Windsor is a rare site in Connecticut in recent years.
The industrial real estate market in the state took a major hit following the 2008 recession, leaving vacancy rates hovering near the 20 percent mark and new construction nearly non-existent.
But several major new leases and projects in the pipeline, including build-out of the 220,000-square-foot FedEx facility on Sullivan Road, signal a slow but real recovery in the state's industrial real estate sector that began showing signs of life at the end of 2011, realty experts say.
"We are not dancing in the streets, but I think the outlook is upbeat," said Mark Duclos, the managing partner of Sentry Commercial, a Hartford-based real estate firm. "Product is starting to come off the market but it is going to be a long tedious return to health."
Heading into 2011, the Greater Hartford industrial real estate market had a vacancy rate of 17.8 percent, according to CBRE-New England, but increased activity — driven by several large transactions — helped spark the remnants of a rebound.
In all, 2011 saw 1.1 million square feet of vacant industrial space in Greater Hartford come off the market, which included 18 deals involving properties with more than 25,000 square feet of space.
That compares to only three sales of properties with more than 25,000 square feet in 2010.
Still, the improved activity only made a dent in the 2.2 million square feet of industrial real estate that became vacant in Greater Hartford during 2010, according to CBRE-New England.
Chris Metcalfe, CBRE-New England's first vice president, said there has been about 600,000 square feet of positive absorption so far this year, although foot traffic has slowed down a bit lately.
And much of the activity is coming from larger deals, which is not typical in the Connecticut market.
In South Windsor, for example, FedEx Ground recently broke ground on a new $50 million distribution center as part of a nationwide expansion to its network that will boost the company's package capacity and speed delivery.
South Windsor offered FedEx a 70 percent tax abatement to choose the town for the facility.
FedEx Ground spokesman Bryson W. Thornton said the company chose its Connecticut location because it offers easy access to local highways, is close to customers, and has a large population from which to recruit future employees.
Thornton said the company will open the facility with about 80 full- and part-time employees moving from an existing facility in Windsor.
In nearby Windsor, the planning and zoning commission recently gave its blessing for Dollar Tree to build a 1 million-square-foot distribution center on 93 acres of former farmland in the New England Tradeport industrial park on International Drive.
Jim Burke, Windsor's economic development director, said he has seen more interest in leasing activity in the industrial sector, although not all talks have translated into deals. The Dollar Tree build-out will serve as a major boost to the market, but there have been other smaller transactions that are helping to fill some vacant space in town, Burke said.
Subinas USA, a Spanish company that specializes in the production of spring units for the bedding and upholstery industry, recently leased 42,718 square feet at 4 Market Circle. Burke said the company saw an opportunity to move closer to East Windsor-based King Coil, a company Subinas supplies.
AKO Inc., a manufacturer of torque wrench calibration systems, recently purchased a 28,500-square-foot industrial building on Baker Hollow Road in Windsor for $875,000, Burke said.
Metcalfe, of CBRE/New England, said the larger deals ranging from 200,000 square feet to 1 million square feet haven't been a sweet spot for Connecticut in the past, but a lack of available land in other key logistics markets along the East Coast is making companies take a closer look at the Nutmeg State.
Other larger deals include furniture retailer Raymour & Flanigan paying $16 million to purchase a 308,000-square-foot Manchester warehouse on Chapel Road, and Wallingford-based Fosdick Fulfillment Corp. signing a lease to occupy 250,000 square feet in a building on Worthington Ridge Road in Berlin.
"Land has run out in more primary logistics markets," Metcalfe said. "We have excellent land in Connecticut."
But while Connecticut has the open space, it doesn't have a lot of ready space to fit those larger needs. As a result, larger deals that do come to the state are spurring some ground-up development.
"That means construction trades will be busy," said Metcalfe, who added that there will not be any widespread new industrial build-out until vacancy rates creep down further.
Duclos, of Sentry Commercial, said brokerage houses felt pretty good coming into 2012, although the first quarter got off to a slow start with some companies holding back on pulling the trigger on a deal.
Activity began to pick up in April, however, and Duclos said he predicts that the industrial vacancy rate will fall one or two more percentage points in 2012. "You can only hold off from expanding for so long," Duclos said.