Hartford Business Journal

8 Hartford Business Journal • May 20, 2019 • www.HartfordBusiness.com Reporter's Notebook Gregory Seay | gseay@HartfordBusiness.com Real Estate, Economic Development/Construction, Banking & Finance and Manufacturing REAL ESTATE Scannell's 'spec' investment bet in Cromwell O n acreage barely visible from I-91 North, near Exit 23/West St. in Crom- well, construction workers are put- ting the finishing interior-exterior touches on a real estate development rarely seen these days in Greater Hartford's commer- cial-industrial market. Next door to the town's Transfer Station, In- diana developer Scannell Properties has erected a 403,000-square-foot, gray-hued masonry shell to house occupants' warehouse-distribu- tion operations in its County Line Industrial Park, 120 County Line Drive. What separates this mammoth structure longer than several football fields from similar properties being developed or recently built in Windsor, Bloomfield and East Granby is that it was erected with no firm leases in hand. That kind of "speculative'' development all but disappeared from Greater Hartford's com- mercial real estate market after the 2008 finan- cial crisis triggered the Great Recession. For several years after, new commercial-in- dustrial construction nearly grounded to a halt. What construction that did occur was done only after developer-landlords had firm leasing commitments in hand for the space they were building, often a requirement for obtaining bank or investor financing. The appearance of spec developments, whether commercial or residential, typically are taken as signs of improving sales and leas- ing conditions in the realty market. Cromwell has at least five other commercial de- velopments totaling more than 139,000 square feet under construction or nearing completion, with a stated construction value of $15 million, town records show. All had a tenant, or in one case, a property owner, in hand before work began. Scannell Properties, the Indianapolis-based commercial devel- oper with real estate spread across much of America and parts of Canada, spent $12.8 million to erect the building's shell, said Cromwell's director of planning and develop- ment Stuart Popper. However, some in- dustrial realty brokers say Scannell has had some difficulty finding takers for its Cromwell property. Contrary to street talk, Popper says he has been contacted by parties indicating interest in leasing part of the building. Scannell is the same developer contracted last year to build a $42.4 million Coca- Cola distribution facility in South Windsor. CBRE New England broker Christopher Met- calfe, Scannell's lease broker, confirms plenty of tenant interest in the Cromwell site, though he says no leases have yet been signed. He described County Line Industrial Park as the largest spec industrial building ever erected in Connecticut "by a factor of two.'' It will be ready for lease-up by summer, he said. Daniel Madrigal, Scannell's development manager in charge of its New England portfo- lio, said tenant interest has accelerated as the building nears completion. Because it is spec, Madrigal said some prospects preferred to check out the property before committing. "We certainly wish it was leased now,'' he said, adding, " … We're on track on where we'd thought we'd be.'' Mark Duclos, managing principal for Hart- ford broker Sentry Commercial, said even some non-spec industrial spaces are sitting unleased. Duclos, who recently moderated a panel discussion in Wallingford hosted by the So- ciety of Industrial and Commercial Realtors Connecticut/Western Massachusetts chapter, offered his assessment of what, at the moment, may be plaguing Scannell and other landlords of industrial space, which has been among the hottest real estate classes in Connecticut in recent years. "I think the slower-than-expected lease-up, at least in part, has something to do with the veloc- ity of the large warehouse market slowing a bit,'' Duclos said. "The other challenge is that logistics and e-commerce needs many times are very spe- cific and if the property doesn't meet the specific needs of the prospective tenant then they will wait for something else or build it." DEAL WATCH NIC Systems' Cromwell expansion planned Two Cromwell tracts have been acquired for $400,000 on which a 12,960-square-foot building will be constructed to house NIC Systems Corp.'s eventual relocation of its Rocky Hill-based operations. Buyer 12DB Properties purchased 30 Commerce Drive and 40 Commerce Drive from C&G Holdings II LLC. NIC, a designer of industrial- automation hardware and software, currently operates out of 51 Belamose Ave., a 35,000-square-foot flex building in Rocky Hill. Hartford's Sentry Commercial represented the seller. The Proto Group of North Haven represented the buyer. Hartford's Stark Building signs leases A pair of office tenants recently signed for more than 5,100 square feet in downtown Hartford's Stark Office Building. Energy broker Titan Energy New England leased 3,533 square feet on the 10th floor of the skyscraper at 750 Main St. In addition, aerial-drone maker-marketer Aqualine took 1,604 square feet of office space on the third floor. Aquiline operates a Bridgeport drone-production facility. New York developer Adam Stark is landlord. Chipotle to Middletown Chipotle Mexican Grill has leased 2,460 square feet of retail space to open later this year in a Middletown shopping center. Oriental-rug merchant- realty developer Abe Kaoud is erecting the retail center on Washington Street, near Route 66, scheduled to open this summer. The lease is valued at $1.1 million, brokers said. North Haven's The Proto Group LLC represented Kaoud. CCARC's N. Britain lease Nonprofit CCARC Inc. leased 5,316 square feet of Class A office space in New Britain. Founded in 1952 to serve adults with intellectual disabilities and their families, CCARC plans to occupy by June 1 its new quarters at 480 Myrtle St., said sole broker Amodio & Co. Real Estate. 480 Myrtle Street LLC is landlord. CCARC's previous home was at 950 Slater Road. Cromwell salon relocation Louis Bernard Inc. leased 1,800 square feet to relocate its salon-day spa to 2 Hammerhead Place in Cromwell. The operator of Beautiful People Salon & Day Spa plans to relocate from space in Cromwell Commons, 136 Berlin Road, according to broker The Proto Group of North Haven. Shetty Cromwell LLC is landlord on the seven-year lease. Priority Express lease Priority Express Courier Inc. leased 15,880 square feet in Middletown. The space is part of the 30,146-square-foot industrial facility on 2.2 acres at 54 Tuttle Place that landlord The Del Favero Family L.P. owns, said tenant broker Sentry Commercial. CBRE represented the landlord. Scannell Properties' 403,000-square-foot County Line Industrial Park in Cromwell. HBJ PHOTO | GREGORY SEAY 480 Myrtle St., New Britain. PHOTO | CONTRIBUTED PHOTO | HBJ FILE The Stark Building, 750 Main St., Hartford.

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