Hartford Business Journal

HARTFORDBUSINESS.COM | August 29, 2022 33 Editor's Take Other Voices Amid office downsizings, Hartford must plot new path forward T he pandemic's impact on Greater Hartford's office market has come into sharper focus in recent weeks. And the headlines haven't been pretty. With the recent news that United- Healthcare and Prudential Financial are giving up a combined 518,000 square feet of office space, it's clear the pandemic will have a meaningful, lasting impact on the office market as employers continue to embrace remote work and the hybrid work model. And this is not just a real estate story. As employers continue to downsize their office footprints, it's confirmation that pre-pandemic work- week foot traffic won't be returning any time soon. At stake is Hartford's future vibrancy. With more downsizing still in the offing, some real estate experts predict downtown Hartford's office vacancy rate will approach 30%. The big question now is where does Hartford go from here? Part of the answer is already in motion as city planners, boosters and developers try to recast Hartford as less of a business district and more of a residential neighborhood. Over decades, downtown Hart- ford essentially morphed into an office park, with tens of thousands of workers commuting into the city during the workweek and leaving after 5 p.m. Nightlife vibrancy, outside of the college bar crowd, was largely driven by special events at the XL Center or other city venues. Over the last decade, Hartford has developed a stronger residential base — a hallmark of vibrant cities — by adding more than 2,200 new apart- ment units, with thousands more set to debut in the years ahead. Demand for those units has been strong with occupancy rates above 90%. Shifting Hartford into more of a residential neighborhood is a sound strategy and the city should continue to add apartments as long as demand keeps pace. A perma- nent residential base will fuel more bars, restaurants and retailers, and hopefully entice more employers to want to join a vibrant community. One outstanding question is whether any Class A office buildings facing higher vacancy rates will potentially convert to apartments. Landlords have told me it's an expensive proposition that is likely only feasible with government support. Last year a bill was introduced in Congress that would create a federal tax credit to fund the conver- sion of unused office buildings into residential, commercial or mixed-use properties. The bill had the support of the MetroHartford Alliance, but hasn't gained much traction. Federal policymakers should seriously consider it as a way to help breathe life into the many cities experiencing the same challenges as Hartford. Future of work But the build-up of downtown Hart- ford's residential population will take years and likely won't fully offset the recent decline in office workers — at least not any time soon. Therefore, Hartford's full recovery also depends on maintaining a strong employer base, including attracting new businesses. While we are seeing headlines of employers slashing significant office space, it doesn't mean those moves are permanent. We are still in the early stages of post-pandemic work life, and while many employers are embracing remote work amid a tight labor market, it doesn't mean that will be the case in three, five or 10 years. The reality is many CEOs and managers want more workers in the office on a consistent basis. The five-day, in-office workweek may be a thing of the past, but if employers eventually settle on a hybrid model that brings workers back to the office two or three days a week, that would aid Hartford's recovery. I think that's where more compa- nies will end up. Where's my evidence? Hartford health insurer Aetna provides an interesting case study. In 2016, Aetna, long known as one of the most flexible employers at the time, announced it was paring back its work-at-home policy because it was negatively impacting collabora- tion. While digital communications tools have significantly improved since that time, it wouldn't surprise me if we see similar declarations made in a year or two. (Aetna, now owned by CVS Health, has been one major Hartford employer to embrace remote work amid the pandemic.) That being said, the days of Hartford relying on major corpora- tions for future growth are largely past us. That may have been true pre-pandemic. The city needs new blood and must target small to midsize compa- nies that see value in a vibrant urban environment. Hartford maintains strong bones and a good value proposition — it's much more affordable than New York, Boston or even Stamford, has a vibrant arts and culture scene with a growing residential base, and will have more restaurant and dining options in the months ahead as a slew of new venues open with support from the city's Hart Lift program. Hartford's path forward will require planning, vision and a strong collab- oration between the public and private sectors. Greg Bordonaro CHIPS bill is a win for New England innovation economy By James T. Brett E arlier this month, after nearly two years and multiple itera- tions, President Biden signed into law a sweeping piece of bipar- tisan legislation aimed at bolstering domestic semiconductor manufac- turing, as well as making key invest- ments in research and development. The New England Council was proud to support the "CHIPS and Science Act" and we believe that its passage is a huge win for the New England innovation economy. First and foremost, this new law makes over $50 billion in investments to bolster the U.S. semiconductor manufacturing industry. Over the past several years, our nation has experienced a critical shortage of semiconductor chips. The shortage is the result of a perfect storm of circumstances, including a variety of supply chain constraints, combined with an increased demand for electronics to support remote work and schooling amid the pandemic. Semiconductors enable the key technologies driving the future economy and our national security, including artificial intelligence, 5G/6G, quantum computing, cloud services, and more. The New England region is home to a number of semiconductor manu- facturers — including industry leaders like Analog Devices and Texas Instru- ments — as well as a wide array of technology businesses that rely on semiconductors to support continued innovation and growth. And so the impact of this shortage on our region has been significant. At the same time, according to the Semiconductor Industry Association, the percentage of modern semi- conductor manufacturing capacity located in the U.S. has declined significantly from 37% in 1990 to just 12% today. James T. Brett An aerial view of downtown Hartford. PHOTO | COSTAR Continued on page 35

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