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October 2, 2023

West Hartford’s in-demand office space a bright spot in struggling sector

HBJ PHOTO | STEVE LASCHEVER William Herchel, president and CEO of solar company Verogy.
PHOTO | COSTAR Charter Realty & Development Corp. in 2021 paid $40 million for the 500,000-square-foot mix of retail, residential and office space in West Hartford’s Blue Back Square. It’s converting the former 40,000-square-foot New York Sports Club into office space.

In about eight months, global liability insurer Beazley will leave a 32,000-square-foot office in a picturesque corner of Farmington for a 20,000-square-foot space set among the handsome sidewalks, busy shops and quality restaurants in Blue Back Square.

Chief Operations Officer Troy Dehmann said West Hartford was the obvious choice as the insurer’s lease wound down in Farmington, where Beazley’s Connecticut home has been since 2006.

A walk-through of West Hartford Center quickly convinced company leadership it was a place that would appeal to Beazley’s 220 Connecticut office staff and clients.

The company will be taking residence at 65 Memorial Dr., a five-story, 172,865-square-foot office building in Blue Black Square.

“It was obvious to me it was a vibrant, thriving urban-suburban location,” Dehmann said. “We are trying to build an environment where people will want to come in and also socialize and get to know each other.”

Long-term smart planning and natural advantages have helped West Hartford generate a vibrancy that’s keeping its office market performing well, even as the sector continues to struggle statewide and across the country coming out of the pandemic.

At the close of the second quarter, 12.8% of West Hartford’s 1.2 million square feet of office space was vacant, according to brokerage and consulting firm CBRE.

That compares favorably to a 28.2% vacancy in 25.9 million square feet of office space available in 17 Greater Hartford cities and towns, according to CBRE.

West Hartford has built a reputation for convenience, with shopping, hotels, entertainment and great dining in easy reach, said CBRE Executive Vice President John M. McCormick Jr.

That has recently drawn tenants like alternative investment management firm ARES Management from Simsbury, Beazley from Farmington and others, McCormick said.

Verogy, a builder and operator of commercial solar power installations, moved in January from downtown Hartford to a roughly 3,000-square-foot office in West Hartford Center. The second-floor office at 124 LaSalle Road — above Max Burger — can accommodate up to two dozen staff, said Verogy President and CEO William Herchel.

Verogy staffers are free to work from home. Even still, the office draws about 10 to 12 people on an average day, Herchel said.

“When we made the decision to move from Hartford to West Hartford, it was partially because we were trying to find a way to reinvigorate our office culture after the pandemic,” Herchel said. “I think partially because of where we are located, we’ve had a lot more people deciding to come in — probably once or twice a week in the beginning and that’s grown over a period of time.”

Good operators

Brokers and town officials say West Hartford office property owners have made smart investments in upkeep and improvements.

Bruce Simons

“At Figure Eight Properties, we are making major investments in our properties,” said Bruce Simons, co-president of the West Hartford-based real estate development and investment firm. “There’s an opportunity with a lot of office tenants looking for a post-pandemic return. They are looking for a nicer experience and a better environment.”

Bruce and his brother, Harris Simons, own and manage two of the town’s largest office properties: the roughly 180,000-square-foot “Town Center” office and retail building in the heart of West Hartford Center, at 29 S. Main St.; and the 150,000-square-foot “Corporate Center West” building, at 433 S. Main St.

Bruce Simons said both office buildings have occupancy rates in the mid-90% range.

Corporate Center West is set away from the town center, located just off Interstate 84. But the Simons brothers are taking steps to improve the retail amenities within walking distance.

They recently secured local permits to add a 5,000-square-foot Starbucks to the 17-acre property. Bruce Simons said he plans to add more medical office and retail space.

Figure Eight is also developing plans for an apartment building with more than 150 units next to Corporate Center West.

The town is helping by continuously improving sidewalks and working with landowners to develop in ways that complement West Hartford’s existing character, said Simons, a lifelong town resident. The care the town puts into landscaping, signage and other elements is hard to quantify, but is felt, he said.

“It really spurs the nearby property owners to reinvest,” Simons said. “It’s a great energy. The town put a lot of effort into its roadways and lighting. It’s hard to show on a pro forma how a beautifully landscaped island helps.”

Kristin Gorski

West Hartford Economic Development Coordinator Kristen Gorski said her town offers about 2.2 million square feet of office and medical space. She estimates 94% of it is occupied.

Gorski said some landlords are contemplating the conversion of retail to office space to satisfy demand, something largely unheard of in most other Connecticut office markets. Even first-floor spaces can be a good fit for office users who have reasons for the public to drop in, such as Realtors.

“It’s interesting because you don’t see that a lot,” Gorski said. “But because we have such high occupancy in office, (landlords) are saying we will take a chance to see if this is a good move.”

Gorski said the town’s success in attracting apartment developers is making it increasingly attractive to other users, including office tenants.

Chris Ostop

Chris Ostop, managing director of brokerage firm JLL Connecticut, said the safe, walkable and vibrant feel in West Hartford is in high demand by employers trying to entice new hires and convince existing staff to spend more time in the office.

“As a leader of a company … you are trying to entice your people to come back in without mandating it,” Ostop said. “You can have ‘free lunch Tuesdays,’ but one of the best things people are doing right now is making their office worthy of their employees’ commute. It has to be a place people want to go. That’s what West Hartford Center is for this area.”

Ostop said traditionally isolated suburban office buildings hold less appeal. Employers can build “all the amenities in the world,” but they end up with a “cruise ship.”

“How long can you live on a cruise ship?” Ostop said.

High demand for space, moderate appetite to build

Ostop predicts more conversions of existing West Hartford buildings to office space. However, it would be difficult to convince lenders to invest in entirely new office buildings, he said.

“As more spaces free up, I’m sure (landlords) will look hard at offices,” Ostop said. “From a ground-up standpoint, it is still difficult. I’m not sure the lending market is there yet. But I think (West Hartford) could accommodate a lot more square footage.”

Chris Conway, president and CEO of the West Hartford Chamber of Commerce, expects the town's office space to remain near capacity for the foreseeable future. He says there is little doubt there is appetitie for more. Companies that move to the town find it more than lives up to their expectations for vibrance, he said. 

"I think West Hartford is the sizzle with the steak," Conway said. "It looks great from the outside, but once you get here, you will find it really is the place you want to be." 

There is some creative conversion of existing spaces into retail, including a portion of the Blue Back Square. 

Charter Realty & Development Corp. in 2021 paid $40 million for the popular 500,000-square-foot mix of retail, residential and office space in West Hartford’s center. The real estate investment and management company is partway through converting the 40,000-square-foot former New York Sports Club into office space.

Andrew Sufian

About half of Blue Back Square is office space, said Charter Vice President Andrew Sufian. Over the past year, Blue Back has leased approximately 65,000 square feet of office space to new tenants that employ more than 400 workers, Sufian said.

The new arrivals, which Sufian declined to disclose, include a couple of smaller users, and three tenants each with about 20,000 square feet, he said.

Overall, Blue Back is currently 95% leased, a 10-percentage point improvement from 2021, when Charter purchased the property, Sufian said.

“There’s a high demand right now,” Sufian said. “Here at Blue Back Square, we really do have that live, work, play. You have proximity to both the Delamar (hotel) and Whole Foods, and walking distance to West Hartford Center. It really is an unparalleled office environment because everything you need is right outside your door.”

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