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January 10, 2020

Greater Hartford’s office market sluggish in 2019 but major deals on tap for 2020

HBJ Photo | Joe Cooper Downtown Hartford.
By Greg Bordonaro

Greater Hartford’s Class A office real estate market had a weak 2019, as the Capital City and surrounding suburbs collectively saw tenants shed 535,000 square feet of space.

Downtown Hartford’s Class A office vacancy rate ticked up slightly to 18.7 percent, as tenants shed 170,000 square feet.

Prudential and Travelers Cos. both shed space downtown increasing the vacancy rate, which was further impacted by mergers and acquisitions and more companies adopting agile work environments that fit more people into less space.

However, 2020 could be a much better year as up to eight companies are currently in talks to lease up 245,000 square feet downtown, which would have a major impact on the market.

All that was revealed Friday morning at commercial realty broker CBRE's annual 2020 Greater Hartford real estate outlook breakfast-forum at the Hartford Marriott Downtown, which was attended by about 375 real estate, banking, legal and other professionals. 

“2019 stats were not overly impressive,” said CBRE Executive Vice President John McCormick. “Vacancy rates rose in downtown and in the suburbs.”

The good news, McCormick said, is that 2020 is looking more bullish, especially for downtown, which could see a wave of new lease activity by mid-year.

In 2019, all four Greater Hartford suburban markets saw Class A tenants collectively shed space. 

Tenants in the Hartford south market, which includes Rocky Hill and Wallingford, ceded the most office space -- 292,000 square feet. That market was impacted by UnitedHealthcare leaving its Rocky Hill office space at 400 Capital Blvd., to consolidate its operations in downtown Hartford. 

Meanwhile, the Greater Hartford office sales market was strong in 2019 with 26 Class A buildings trading hands, CBRE said. Eleven of the 26 sales had new buyers to the region, including from Hong Kong and Canada.

Nearly every office building that hit the market sold, CBRE said.

Industrial market activity slows

Greater Hartford’s red hot industrial real estate market had a hiccup in 2019, as tenants shed 305,000 square feet of space. However, CBRE broker and Vice President Kyle Roberts said the reduction wasn’t meaningful and likely not an indicator of future decline.

“What does it mean?,” Roberts asked. “Not much.” 

Of the 75 million square feet of Greater Hartford industrial space, only 8 percent remained vacant at the end of the year, CBRE said. 

Roberts said the region’s industrial market in recent years may have experienced its best stretch ever.

From 2011 to 2018, 6.5 million square feet of industrial space was absorbed, he said, helped by expansions by e-commerce, food and beverage and home improvement companies.

Notable 2019 industrial deals included: 

Joe Cooper contributed to this report

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