CBRE sees higher area leasing, rents in '16
PHOTO | HBJ File
One Financial Plaza, also known as The Gold Building.
CBRE New England's annual Greater Hartford commercial and investment real estate yearend wrapup and new year outlook is an extremely popular and well-attended forum for those who are, or aspire to be, in the know about the region's realty scene.
As a supplement to its January event, the downtown Hartford branch of team CBRE recently released its 2015 market overview and 2016 outlook to help landlords and tenants track its refined data and intelligence.
Here's a condensed breakdown of CBRE brokers' 2016 predictions:
Downtown Hartford: “Increased leasing activity and positive absorption estimated at 50,000 square feet are anticipated for 2016. Due to the completion of retail and housing developments downtown and the state of Connecticut's consolidation of 2,300 employees at Connecticut River Plaza, we expect continued pressure on parking availability and pricing. … As the city becomes more vibrant, we expect to see suburban tenants continue to consider relocations to the downtown. There are high-quality alternatives and space at marquee buildings such as 1 State Street, One Financial Plaza and CityPlace I, featuring asking rental rates of $23.50 – $27 per square foot. These premium spaces have been long occupied and will garner most of the leasing activity in 2016.”
– John McCormick Jr.
Suburban East: “The east market stabilized over the course of 2015 as absorption continued in Class-A spaces; there is reasonable confidence that 2016 will be a positive year for this submarket. Glastonbury will continue to lead the east in absorption and rent growth. Tenants seeking locations east of the river may consider East Hartford for quality Class-A spaces as a result of the continued tightening office market in Glastonbury. … Landlords should also be prepared to provide tenant improvement packages and concessions to lease less attractive options.”
– Jennifer Gosselin
Suburban West: “New requirements totaling 75,000 square feet in the market today should result in a strong start to 2016's performance. Large block opportunities in Farmington and Southington will gain increased attention from tenants inside and outside of the submarket. Farmington and West Hartford will continue to lead the west in overall activity and rent growth as those towns continue to tighten.''
– Michael Puzzo
North Suburban (Bloomfield, Windsor, etc.): “…As long as the economy remains healthy and there are no major tenants downsizing or relocating to other markets, the north market will likely remain as healthy as it has been for several years. With no new construction on the horizon, all it would take to shift towards a landlord's market is one or two mid- to large-sized tenants migrating from another market. At that point, there would likely be an increase in lease rates and/or a reduction in tenant improvements. Even then, the north market would still be far less expensive than the west, south and east suburban markets by $3 - $6 per square foot.”
– Bob Botters
South Suburban Office (Rocky Hill, Wethersfield, etc.): As the supply of Class-A space dwindles, tenants will be forced to renew or relocate to less desirable space if they are unwilling to absorb the increased rental rates. Rental rates will slowly increase and tenant improvement allowances will decrease, resulting in tenants making financial contributions to the cost of renovating the premises. There is no new speculative construction planned or being developed in the suburban south market. Tenants seeking space will be forced to consider pre-approved sites ready for development.”
– David Barnes
Central Connecticut Investment: “With more than 10 office opportunities either on the market or under contract as 2016 begins, another year of active trading is to be expected. However, with so many large acquisitions over the last four years, sales volume is unlikely to approach the milestones established in 2015. We continue to expect equity sources from outside the market to drive demand, but several strong local players continue to make an impact on the supply and demand curve as well.''
– Patrick Mulready
Greater Hartford Industrial: At the start of 2016 the vacancy rate hit below 10 percent, indicating a landlord-favored market not experienced since [the first quarter of] 2008. Rent growth should begin to accelerate from its current, slow pace, particularly for higher-quality spaces with large contiguous availability.
– Christopher Metcalfe
Gregory Seay is the Hartford Business Journal News Editor.
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