Hartford Business Journal

8 HARTFORDBUSINESS.COM | October 10, 2022 Deal Watch Regional Response Greater Hartford leaders convene working group to plot future uses for increasingly vacant office space By Michael Puffer mpuffer@hartfordbusiness.com U nited Healthcare and Pruden- tial Financial are dramatically reducing their downtown Hartford footprints, giving up hundreds of thousands of square feet of leased office space. Voya Financial recently put up for sale its 470,000-square-foot Windsor headquarters. The Hartford, in June, announced plans to sell or lease its 457,396-square-foot office building, also located in Windsor. With a drumroll of large corporations shrinking their physical footprints in and around Hartford, area economic development directors, industry experts and others are coming together to brainstorm a response. "The first order of business is to get the biggest communities together and agree that, yes, this is a regional problem and, yes, this is a path we want to go down," said David Griggs, president and CEO of the Metro- Hartford Alliance. "I'm hopeful we will be able to … first build a room where people are able to talk and share and come up with ideas and find solutions we can all use." Griggs is spearheading an office space working group. There was a meeting in September with just a handful of participants. Griggs plans to recruit more experts from the business community. He should have no shortage of takers. Philip Gagnon, a principal with brokerage firm Colliers in Hartford, said the Alliance's broad planning effort is a good idea, so long as it "brings all the stakeholders together." That means inclusion of the trans- actional professionals — brokers, landlords and tenants, he said. "They are the boots on the ground telling you where the demand is coming from and isn't coming from," Gagnon said. Gagnon said he would suggest an effort to convince employers of the need to return workers to centralized offices. "We are still seeing the large Class A occupiers are taking advantage of the work-from-home trend and not insisting that employees return to the office in a big way," Gagnon said. "Is that trend going to continue? I think it's going to continue as long as nobody is incentivizing the issue of back to the office, as long as the CEOs are not saying: 'Hey, we need you back in the office to preserve the culture.' " Rising vacancies CBRE's second-quarter report on the Greater Hartford office market paints a picture of atrophy. Hartford and surrounding towns MetroHartford Alliance CEO David Griggs with downtown Hartford's City Place I office tower in the background. saw negative absorption of 171,010 square feet of office space, according to CBRE. Office vacancies saw a slight uptick in the quarter to 20%, according to CBRE. Vacancy rates are highest in the northern section of Greater Hartford — Bloomfield, East Granby, East Windsor, Enfield, Windsor and Windsor Locks — at a staggering 40.5%. Down- town Hartford's Class A office vacancy rate is 20.1%, CBRE data shows, a number that is expected to climb as leases expire. "Demand for office space continues to feel the aftershocks of the pandemic as large employers who once accounted for nearly half of the occu- pied footprint in the Greater Hartford region are further embracing remote and hybrid work and giving back significant amounts of space," reads a portion of the CBRE report. But it also notes an "uptick" in foot traffic in Hartford and the suburbs. John McCormick, executive vice president of CBRE, said more companies are beginning to return staff to offices for longer portions of the week. While there may be a drawdown in the amount of space leased, the number of people working in many office buildings is on the rise. In the summer of 2021, only about 20% of leased office space in Hartford HBJ PHOTO | MICHAEL PUFFER Phil Gagnon John McCormick

• Cover