Hartford Business Journal

6 HARTFORDBUSINESS.COM | MAY 17, 2021 Deal Watch Major Hartford employers target a fall return By Greg Bordonaro and Matt Pilon gbordonaro@hartfordbusiness.com Hartford Business Journal polled a half-dozen large companies that collectively employ thousands of workers in the Capital City, asking them about their current remote work situations and plans to bring more workers back to the office in the months ahead. Here's what they said: The Hartford, Travelers, CVS Health/Aetna Many local employees of Hartford's three major insurers — CVS- owned Aetna, Travelers Cos. and The Hartford — continue to work remotely, but all three companies expect to begin calling more workers back downtown in the late summer or early fall. All say they are focused on employee health and safety in their decision-making. "Our decisions are, and will continue to be, informed by experts within our organization as well as public health officials at all levels of government," said The Hartford spokesman Matthew Sturdevant. Travelers is currently allowing employees to come back to the office on a voluntary basis and is planning a broader return to the workplace after Labor Day. "While we're still working through those details, it will likely include a higher degree of flexibility as compared to our pre-pandemic model," said Travelers spokesman Matt Bordonaro. Joe Goode, a spokesman for CVS Health, parent to Hartford health insurer Aetna, said the company's return date isn't set in stone, but it is also preparing for a hybrid work environment. "The COVID-19 pandemic has reinforced that our colleagues can work well together, innovate and deliver results outside the traditional office environment," Goode said. "Our new approach to work will include a combination of in-person and virtual work." Bank of America Bank of America, which has Hartford offices in CityPlace I and II, plans to have workers back in the office around Labor Day, with a slow ramp up starting before then. "Our plans are for employees to return to their offices in stages, and depending on their roles and what is going on in each local market," said Joe Gianni, BofA's market president for the Hartford region. "We've demonstrated that we can operate in a work-from-home environment at the flip of the switch to maintain business continuity, but we thrive on in-person interaction. We are going to give people at least 30 days ahead of time to make sure they feel comfortable and will require face coverings and social distancing, and limit the number of people in a meeting." Shipman & Goodwin Law firm Shipman & Goodwin, which is the largest tenant in the 310,074-square-foot 1 Constitution Plaza office tower downtown, continues to "strongly encourage" teleworking, said Anne H. Littlefield, partner and general counsel. However, Littlefield said the firm expects more attorneys and staff to return over the summer months. "We take great pride in the flexibility and efficiency of our staff and attorneys in adapting to new remote work processes during the past year," she said. "Given the positive experiences of clients, staff members and attorneys, we anticipate that the firm will continue to support a greater proportion of flexible working arrangements than we experienced in our pre-pandemic mode of operation." Hartford Steam Boiler and Infosys Not all companies are willing to publicly announce a timeline for returning to their offices. Spokespersons for specialty insurer Hartford Steam Boiler and IT and outsourcing provider Infosys say most of their several hundred employees based out of the One State Street and Goodwin Square office towers, respectively, continue to work from home with no timeline for a return to the office. greatly slow its spread, is unlikely due to challenges in vaccinating a sufficient portion of the population, the New York Times reported this month. That means the virus may be something that must be managed for the foreseeable future, which has implications for physical workplaces and any other location humans gather in close proximity. "I don't think anyone has figured out the impact of that, what that means," said Gary B. O'Connor, a Hartford-based commercial real estate and land use attorney at Pullman & Comley. "That may factor into a lot of decisions relating to the return to work and the office market in general." Whether corporate decision- makers are privately leaning toward a mandatory return, permanent remote work or a hybrid of the two, they are all feeling the pressure of competing interests and obligations, Griggs said. The local economy is suffering from the lack of foot traffic downtown, and a non-vibrant center city could make it harder to recruit new hires; but current employees may also view an order to return to the office negatively. "It's a delicate dance," Griggs said. "Our employers certainly feel the need from the city, small businesses and restaurants to have their people back. But at the same time, the number one thing is talent." Regaining pandemic lease losses How quickly and to what extent employees return to Hartford has real stakes for the commercial real estate market. While downtown's office vacancy rate has only ticked up 1.9 percentage points during the pandemic — it currently stands at 18.9%, according to real estate brokerage CBRE — vacancies are seen as a lagging indicator due to long leasing cycles in the office market. Michael Puzzo, a senior vice president at CBRE in Hartford, said those relatively small upticks don't mean much for now. However, in the next few years, expiring leases of several major Hartford office tenants — which Puzzo declined to identify — could be of greater consequence, potentially resulting in a downsizing of several hundred thousand square feet in the city. "The hits to the market that concern me are really more related to the large users of space that have the ability because of their scale to put large blocks of space back on the market," Puzzo said. "The efforts to do more with less, which had gained steam prior to the pandemic, have accelerated." Nationally, Cushman & Wakefield predicts office vacancies will rise until the middle of 2022 before demand picks up again and vacancies begin to recede. That prediction hinges in part on forecasted employment growth, so whether Hartford follows a similar trajectory, or sees higher vacancies and a longer recovery could depend on job creation. "Hartford may not come back like a jack-in-the-box, but if we come back like the tide coming in where it's slow and steady and all of the sudden you look down and it's around your ankles, that's OK," said Cushman's Grieco. "That's what Hartford has traditionally been." At State House Square, Jakubowski said almost every office tenant with recent lease expirations opted to renew. "We're in a good spot with that," he said, adding several larger tenants have renewals looming in 2023 and 2024. Shelbourne, which owns or co- owns the Metro Center (350 Church St.), Stilts Building (20 Church St.), Gold Building and 100 Pearl, has collected nearly 100% of its owed office rents during the pandemic, but has seen some tenants with expiring leases downsize their footprint or not renew at all, Schlossberg said. As a result, the company's Hartford office properties, which total over 2 million square feet of space, have lost approximately 40,000 square feet of leased space during the pandemic. "Hartford has been a very challenging market and we had made a lot of strides before the pandemic. We have to fight back now," Schlossberg said, adding that he expects the office market to begin to stabilize after Labor Day as companies start to return more workers to the office. Shelbourne also said its team is talking to prospective tenants that could soon gobble up square footage that's already been vacated or could be over the coming months. "Perhaps some of the more traditional mainstay businesses that we've been accustomed to in Hartford might be downsizing their footprint, but on the other end, we're also seeing new industries and new businesses that are looking to expand and come into downtown," said Michael Seidenfeld, Shelbourne's chief operating officer. "There's no way to know where the whole thing will shake itself out." "We're not fixated on the past and we're very nimble and flexible and we adapt," he added. David Griggs Travelers' downtown offices at One Tower Square, where the insurer says employees will start to return sometime around Labor Day. Travelers owns the building, but is also a significant tenant in a number of downtown office properties. PHOTO | COSTAR

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