Hartford Business Journal

www.HartfordBusiness.com • July 27, 2020 • Hartford Business Journal 9 FOCUS: REAL ESTATE Asylum Street. "But I certainly had hoped by now we'd be in a much bet- ter place nationally." Downtown employers have largely had success pivoting to remote- working models, he said, but some have experi- enced headaches with the change as younger staff may be juggling child care or other distrac- tions during business hours. Tenants have also reported that telework- ing has made it difficult for new hires that would otherwise benefit from in-person training to advance their careers. "For some, they will have to go back to an office environment," Putnam said. "It's very hard to get noticed or stand out amongst your peers if you are limited to interactions on the phone and Zoom meetings." Christopher Ostop, a managing director/broker of Jones Lang LaSalle LLC (JLL), estimated that downtown's vacancy rate could reach "upwards of 20%" as office leasing has grinded to a halt, and as many larger employers have told staff to work from home until Jan. 2021. Elsewhere downtown, insurers Aetna and Travelers Cos. have ordered staff to work remotely through at least Labor Day. JLL, mean- while, is not yet requiring employees to return to the office, and Cushman & Wakefield's Hartford office is currently op- erating at 25% capacity, Ostop and Putnam said. "Everyone is kicking the can," Ostop said of the lack of office activity downtown. "Nobody wants to make a multi-year decision based on what's happening today." Unlike the retail market, he said most office tenants are locked into five- to 10-year leases they can rarely break in terms of duration or payment. Tenants sitting on excess space that were previously waiting for new business to hire additional employees are likely to shed that square footage. "I'm not expecting catastrophic changes to our tenant roster in downtown Hartford, but I would sus- pect over the next five years, as ten- ants come up for renewal, I suspect most will likely renew for less space," Ostop said. "What I'm not seeing or hearing, I don't think anybody is re- sponding to COVID saying we need to spread out, and take more space." Bob Gaucher, a senior com- mercial real estate special- ist at OR&L Commercial LLC, says he's seeing the same level of leasing uncertainty in Hartford's sub- urbs — where the vacancy rate is 19.8% — as tenants are postponing their expansions. Several O,R&L clients, he said, are reluctant to relocate to office buildings where they would have to share elevators, smaller office quarters, or amenities like cafete- rias, lounges and fitness centers. "Some of these amenities are not as important anymore," Gaucher said. Signs of life Prior to March, New York office landlord Adam Stark said he was fielding a record number of leasing inquiries since acquiring his 18-story, century-old skyscraper at 750 Main St. three years ago for $4.3 million. "When things struck in March we were in the middle of con- versations on a number of leases and expansions," Stark said of the 128,334-square-foot tower, which straddles the prominent corner of Main and Pearl Streets downtown. Stark said the tower, which was 65% occupied prior to the pandem- ic, recently started to book office showings for expansions, including with a few existing tenants. That comes just weeks after nearly all leasing negotiations there stopped. "Some of the prospective tenants that disappeared are starting to come back, as well as a whole bunch of new ones," he said. Stark is bullish that only two tenants at the roughly 100-suite tower have had to shed space or pass on renewing their lease during the pandemic. He's also optimistic because occupancy at the tower, which is partially occupied by Crosskey Architects, The Connecti- cut Forum, several law firms and startup Aquiline Drones, had been trending upward earlier this year. "When you are looking at things from a long-term perspective, there's always short-term bumps that need to be overcome," Stark said. "It doesn't change our underlying feeling that Hartford is an exciting place." Adam Stark, President, Stark Office Suites A sign outside Hartford Stage and the 20 Church St. office tower warns residents to stay safe during the COVID-19 pandemic. HBJ PHOTO | JOE COOPER Closer Coverage SM means more value, delivered with a personal touch. A contractor's success is built on reputation and delivering on promises. Insurance is no different. 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