Hartford’s tallest office tower faces loan delinquency
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City Place I tower, at 185 Asylum St., in downtown Hartford
Address: 185 Asylum St., Hartford
Size: 885,000 sq. ft., 38 stories
Value: Privately assessed at $64 million (down from $114.5 million in 2015)
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Hartford’s tallest skyscraper has lost nearly half its value as occupancy has fallen to about 50%, and perhaps lower, according to a recent report by commercial real estate data tracking firm Trepp.
Trepp – which receives monthly reports from trustees of securitized mortgages – reported that a recent appraisal of the City Place I tower, at 185 Asylum St., determined the property’s value had fallen from $114.5 million in 2015 to $64 million.
The 38-story, 885,000-square-foot tower was built in 1983 and renovated in 2010. It was sold to Boston investor Paradigm Properties for $113.2 million in 2015.
The drop in value means the property is worth less than the $79.3 million remaining on Paradigm's loan, according to Trepp.
Attempts to reach Paradigm ownership were unsuccessful.
The loan that funded the purchase is delinquent and in special servicing, according to Trepp. Special servicing occurs with commercial mortgage backed security loans that are troubled and need some sort of workout.
Chris Ostop, managing director of real estate services firm JLL Connecticut, attributes City Place I’s current struggles to UnitedHealthcare’s decision to drastically reduce its footprint when its lease came up for renewal in 2023.
Ostop said it was just bad timing. The lease came up for renewal right as companies were embracing remote work. He said City Place I is still a premier location and will, eventually, return to being one of the best-performing buildings downtown.
City Place I has a lot of advantages, including new elevators and many floors that were updated in 2010, Ostop said. UnitedHealthcare’s departure from several floors has opened up a once-exclusive fitness center to any tenant in the building, as well as a conference area with breakout training rooms.
It has also opened the opportunity for a tenant to grab the banner signage spot atop the city’s tallest building, Ostop said.
But, given the relative lack of large companies moving into the state and city, City Place I may have to wait until larger tenants run out leases in other buildings and are free to move, Ostop said.
“In my opinion, City Place is still one of the top assets in the market,” Ostop said. “It’s just a question of when will demand pick up.”
The move to remote work-friendly policies following the COVID-19 pandemic spurred many companies to shed office space across the nation. Hartford’s office market has been rocked by the impact, with some estimating office vacancy rates near 40%.
The trend has caused several major Class A office towers in downtown Hartford — the Metro Center at 350 Church St. (293,639 square feet); the Stilts Building at 20 Church St. (419,600 square feet); and much of the Constitution Plaza office complex — to fall into foreclosure.
A working group including high-level representatives of the city, state Department of Economic and Community Development and Capital Region Development Authority formed this past summer to begin analyzing which buildings are best suited for conversion.
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