Hartford Business Journal

7 HARTFORDBUSINESS.COM | JANUARY 17, 2022 DEAL WATCH At the time of the report, there was more than 1.1 million square feet of new industrial space under construction, along with several other projects in the permitting pipeline. A midyear analysis of industrial real estate markets in Connecticut and western Massachusetts by realty consulting firm Newmark noted sustained strength in the sector despite knocks to the office and retail markets. The average advertised rental rate was up 3.4% from a year prior. Newmark's 12-month outlook predicted a continuing drop in industrial vacancies and increasing rental rates. The COVID-19 pandemic hyper- accelerated a move to online retail, fueling demand for industrial and warehouse space, said Art Ross, senior managing director of the industrial practice group for Newmark, which has an office in Avon. "I think what a lot of people considered would happen over a 10-year period is just happening overnight," Ross said. Demand for industrial space has manifested in new trends, including conversion of large dormant retail spaces to industrial and warehouse use, Ross said. In Orange, for instance, Newmark is working to transform a shuttered Sears location, Ross noted. "There are many other companies other than just UPS, Amazon and FedEx that are locating here," Ross said. "There are suppliers, tier two contractors … . [They are] not only servicing the world of logistics and e-commerce but also the world of manufacturing that is fairly strong in Connecticut as well." An inventory shortage, combined with "significant appetite from new users" and an influx of investors are Nick Morizio Greater Hartford industrial real estate market snapshot* Buildings 1,476 Total sq. ft. 76,535,046 Vacancy rate 6.9 Space absorption 254,879 Avg. asking rent $5.36 per sq. ft. *The data is from the third quarter of 2021. Space absorption is how much net space tenants added in the third quarter. Source: CBRE A California-based real estate company recently paid $5 million for this 51-year-old, 70,000-square-foot Bristol industrial property at 60 Wooster Court. keeping up demand, Ross said. "Connecticut is still considered a secondary industrial market but it's a meaningful market and we have caught the attention of investors from the Boston area as well as the tri- state area that never considered this market before," Ross said. Ross pointed to deepening involvement in Connecticut by Indiana-based Scannell Properties, an international real estate development and investment firm. Scannell has built, leased and sold numerous warehouse properties in central Connecticut in recent years. It's been so bullish on the market that it's even constructed properties on spec, meaning it didn't have a tenant lined up before construction began. A recent example is the 182,000-square-foot distribution center it built at 240 Ellington Road in South Windsor. Amazon last year signed a long-term lease to occupy the entire property. Developers have been recognizing Connecticut's potential for large distribution centers, given its central location in the region, airport and highway infrastructure, Ross said. "Values are up 20% and rents are moving up, which is a rarity in the Hartford market," said Nick Morizio, president of brokerage firm Colliers International in Hartford and New Haven. The vacancy rate for high-bay warehouse space is below 2%, down from about 8% or 9% just five years ago, Morizio said. He anticipates the conditions fueling rising industrial real estate values to prevail at least through 2022. The market will cool only when enough new inventory has been added, he said. "Now developers are building new spaces and warehouses are going up every day," Morizio said. Scannell Properties built this 182,000-square-foot South Windsor facility at 240 Ellington Road on spec, and last year signed Amazon as a tenant. HBJ PHOTO | GREG BORDONARO PHOTO | COSTAR Top Greater Hartford industrial property sales of 2021 Property address City Sale price Buyer Building sq. ft. Year built 456 Sullivan Ave South Windsor $50,000,000 Metropolitan Realty Associates, LLC 304,249 2012 101 Prestige Park Rd (Part of Multi-Property Sale) East Hartford $20,987,252 ACG Equities, LLC 26,473 1962 50 Talbot Ln South Windsor $13,000,000 Tribe 9 Foods 153,247 2000 100 Marketing Way Suffield $10,677,864 Rug Pad USA 185,318 2015 255 Myrtle St New Britain $6,950,000 NorthBridge 67,747 2000 76 County Rd (Part of Portfolio) Eastford $6,266,284 STORE Capital Corporation 79,447 1966 60 Wooster Ct Bristol $5,024,662 Montecito Real Estate Investments 69,494 1969 220 Strong Rd South Windsor $5,000,000 Clancy Relocation & Logistics 48,060 1975 Source: CoStar

• Cover