NewHavenBIZ

12 n e w h a v e n B I Z | J a n u a r y 2 0 2 1 | n e w h a v e n b i z . c o m New Haven's office market faces uncertainty in 2021 By Michael C. Bingham W hen will south central Connecticut's office real estate market, anchored by the dynamic eds-and-meds-fueled engine of New Haven, return to pre-COVID levels of activity? Tomorrow? Next month? Next year? Ever? Or maybe never. By any useful metric, 2020 was a disastrous year for the office market — in Connecticut and the nation. When the pandemic exploded in mid-March, the vacancy rate in New Haven's central business district stood at just under 8 percent. By the end of the third quarter, according to Colliers International, the overall New Haven office vacancy rate had risen to 17 percent — still "muted" compared to many other mid- sized markets in the Northeast. (In "normal" business conditions, 5 percent is considered the point of equipoise between supply and demand.) Outside the central business district, the office vacancy rate swelled to nearly 28 percent. e actual daily occupancy rate in New Haven office buildings plunged to between 20 and 30 percent, Colliers estimates. Revenues in many industries, especially service sectors, fell sharply or evaporated. Not conceiving that the emergency could last beyond 30 or 60 days, many landlords forgave rent payments from beleaguered tenants for a month or two. But then those landlords, under pressure from lenders, were forced to clamp down the screws on tenants — many of whom were laying off workers to keep their heads above water. "With the realization of COVID hitting in March we entered into a recession and the office market froze," said Stephen Press, co-principal of Press/Cuozzo Realtors in Hamden. "Tenants that were about to sign leases or extend leases hit the pause button and requested time to wait and see what their worlds would look like and what their future office requirements would be." ere were signs of life, including strong leasing activity at the Class A building at 195 Church Street (the New Haven Savings Bank building). But for most properties, including in the central business district, leasing activity froze. At downtown's largest Class A building, the 467,500-square-foot Connecticut Financial Center at 157 Church Street, leasing queries all but stopped, according to Sean O'Neil, senior vice president of Jones Lang LaSalle, leasing agent for owner Chase Enterprises in Hartford. Still, occupancy remains stable at the 28-story facility — for now. O'Neil says no lessees have jumped ship; Bank of America in the spring extended its lease of 30,000 square feet. Available office inventory at the Financial Center today Frank Hird C O M M E R C I A L R E A L E S T A T E Stephen Press The New Haven Savings Bank building at 195 Church St. in New Haven has seen strong leasing activity despite a spike in the city's office vacancy rate. PHOTO | COSTAR

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