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16 Hartford Business Journal • April 6, 2020 • www.HartfordBusiness.com By Joe Cooper and Greg Bordonaro jcooper@hartfordbusiness.com; gbordonaro@hartfordbusiness.com T he 2008 financial crisis and ensuing nearly two- year recession wreaked havoc on downtown Har- ford's commercial real estate scene, which at the time was just starting to show signs of life. Downtown's office vacancy rate skyrocketed to 25%, the city's unemployment rate peaked at 16% and venerable institutions like the Goodwin Hotel shuttered. About a decade later the coro- navirus pandemic is threatening another early rebirth in the Capital City, which has added nearly 1,500 apartments and new entertainment venues and employers in recent years, including Dunkin' Donuts Park, Infosys and Stanley Black & Decker, among others. The essential shut down of many parts of the state's economy to prevent the spread of COVID-19 raises the obvious question: Is Hartford headed toward another major downswing? Many local real estate and economic development experts say it's too early to determine the long-term economic impact, but they remain hopeful that this slowdown, which is different from any past recession, won't be as harmful to Hartford, particularly downtown. However, there are still many unknowns. Retail storefronts and hospital- ity and entertainment venues are likely to take a beating — already downtown's 116-room Homewood Suites by Hilton hotel and Hanging Hills Brewery announced they will permanently close their doors. Meanwhile, multifamily properties could see a leasing slowdown, while office space may remain stable short term, although more tenants may be reluctant to sign long-term leases or expand, given the uncertainty, experts say. If companies find work-from-home is effective, they could consider downsizing office space longer term. "The longer this goes on, the more harmful it will be to the real estate market," said Donald Poland, manag- ing director of urban planning at East Hartford real estate advisory firm Goman+York Property Advisors LLC. "It's hard to make investment decisions … right now and the longer that contin- ues the more detrimental it will be." Poland said Hartford's commercial market may be more subject to neg- ative outcomes from the COVID-19 outbreak compared to Boston, for example, because there are already fewer jobs and less population and development growth here. However, downtown commercial space's saving grace could ultimately be that many of the center city's larg- est corporate tenants — including health care, insurance and IT firms — are being less impacted by the crisis economically, at least right now, and operate in high-demand industries. "From a downtown commercial space perspective, we may be in a bit of a better position based on who our large corporations and occu- pants are," Poland said. Office leasing impact Amid uncertainty in the financial markets, area real estate executives predict there will be a disruption in office lease negotiations, at least in the coming months. That's especially true for small busi- nesses that were looking to expand or extend a lease before the coronavirus outbreak, according to Christopher Hartford office vacancy rates Source: CBRE 2008-Q1 2008-Q2 2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2018-Q1 2018-Q2 2018-Q3 2018-Q4 2019-Q1 0% 5% 10% 15% 20% 25% 30% Hartford oce vacancy rates Class A properties Class B properties Waiting Game The Great Recession wreaked economic havoc on downtown Hartford. Will COVID-19 do the same? Trumbull Street in downtown Hartford looks empty on a recent weekday morning in March, as many businesses have been ordered to close their doors to stem the spread of the coronavirus. HBJ PHOTO | JOE COOPER