Hartford Business Journal

HARTFORDBUSINESS.COM | MARCH 20, 2023 7 DEAL WATCH tectural firm Burns & McDonnell occupies 48,606 square feet at 108 Leigus Road. Liberty Mutual leases 13,963 square feet and global fluid engineering firm Sulzer has a 4,000-square-foot office. "It's beautiful," said one Burns & McDonnell employee as she stopped for lunch at the cafeteria on March 7. "The temperature is always on point. It's a nice, beautiful office." Suburban office struggles Mammoth suburban office campuses in Connecticut have struggled in recent years as compa- nies have embraced remote work and seen their space needs shrink. Voya Financial put its 470,000-square-foot Windsor office building on the market last August. The building was constructed for Voya (formerly ING) on a 76.8-acre campus for $100 million in 2007. Voya last year said it was considering selling the property and leasing back 85,000 square feet as it embraced remote work. Last June, insurer The Hartford announced plans to sell or lease its 457,396-square-foot Windsor office building at 1 Griffin Road North, reassigning 500 workers there to downtown Hartford. The Hartford has since listed the property — erected in 2007 on 72.9 acres — for sale. It's been on the market since January and "We are actively marketing the Windsor building for further lease or sale," The Hartford said. In November 2021, a pair of New York investors purchased MetLife's 548,301-square-foot Bloomfield office building for $10.4 million. The partners have since invested millions more in repairs, upgrades and new amenities. MetLife paid $50 million for the 1983-vintage building in 2007. According to a market analysis by brokerage firm CBRE, office vacan- cies in Hartford and 17 surrounding towns reached 21.5% at the end of the fourth quarter of 2022, with 27.3% of space available for lease. Greater Hartford office tenants last year shed 1.2 million square feet of space. Wallingford, a little further south, is also facing challenges. "It's slow and it's not rebounding anywhere near what we hoped after COVID," said Wallingford Economic Development Commis- sion Chairman Joe Mirra of the town's office market. The Campus at Greenhill is perfectly suited for offices, but zoning also allows a range of uses, Mirra said. He plugged the low electric rates offered by the town-run utility company, along with other appealing qualities. "It's easy off and on for highways, accessible to two major airports," Mirra said. "Also, it's in the middle of three or four major medical institu- tions and the workforce is educated." Mirra said in the past few months he has fielded several calls from logistics developers interested in vacant spots near the Campus at Greenhill. Challenges and opportunities David Griggs, CEO of the Metro- Hartford Alliance, said Connecti- cut's suburban office struggles are mirrored nationally. "We are seeing the same dynamic across the board," Griggs said. "The work-from-home model is seeing these structures across the nation becoming, … I don't want to say obsolete, but I don't know if there is a better term." Griggs said nationwide there is growing contemplation of demol- ishing suburban office parks, even "relatively new" ones built in the past two decades. "The good news is we aren't losing workforce," Griggs said. "These aren't companies saying: 'We are going from 400,000 square feet to 50,000 square feet and we are going to lay off 2,000 people.' What's not great news is the excess 350,000 square feet that the company no longer needs and that no company necessarily needs." Susan Winkler, vice president of the MetroHartford Alliance and exec- utive director of the Connecticut Insurance & Financial Services group, is a bit more sanguine. Winkler anticipates rebounding office populations. And insurance and financial services companies will continue to want proximity to Hart- ford as the "insurance capital of the world," she said. "I am an eternal optimist and I always feel the industry is poised for growth," Winkler said. Expanding real estate investor has high hopes for apartments in former Hartford hotel By Michael Puffer mpuffer@hartfordbusiness.com O ne of the new owners of a 19th-century, Gothic Victo- rian-style brick apartment building near Hartford's Bushnell Park said he plans extensive renovations to the former hotel property. "It's not going to be cheap and I'm fine with that because I see poten- tial," said Shlomo "Sam" Sarot, a principal investor in the recent $3.97-million purchase of the roughly 160-year-old building at 385 Main St. Sarot heads one of two limited liability companies, both based in New York, that bought equal shares of the former five-story Hotel Capitol, which long ago was converted to 28 apartments with three ground-floor storefronts. Attorney Alexander Shulman, a friend and neighbor of Sarot's from Long Island, is the other co-owner. Sarot said he expects to spend at least $200,000 in the short term to fix the parking lot, front façade and lobby at 385 Main St. After that, he plans to update common areas floor by floor, replacing dated, purple-hued hallway carpets, straightening time-worn stairway landings and redecorating. Each apartment will be remodeled as it's vacated. Sarot said he is still hashing out budget estimates. He's hired Glastonbury interior design studio Artegriz to plan the look. Artegriz Principal Danielli Franquim said the vision is to modernize elements of the building while maintaining its historic charm, including a caged elevator. Sarot is a friend of prolific multi- family developer Avner Krohn, another New York real estate investor who has led significant apartment developments in downtown New Britain. Sarot got his introduction to Connecticut helping Krohn line up investors for projects in New Britain. Sarot said he'd like to have a similar transformative impact on downtown Hartford and is eyeing additional property purchases. The Hotel Capitol property has had other ambitious suitors in the past. In 1998, it was acquired for $630,000 by then-Aetna Chairman Richard Huber and hotel consultant Suzanne Hopgood, according to the Hartford Courant. Huber, at the time, expressed his confidence in Hartford's improving economic outlook. Hopgood — who would later become board chair of the Capital Region Development Authority (CRDA), a quasi-public agency that has subsidized thou- sands of new market-rate apartments in downtown Hartford over the past decade — talked of "spiffing up" the interior, according to the Courant. Sarot's investment does come with some nearby momentum. A couple blocks to the west, the city and CRDA are working to redevelop 12 acres of underused parking lots into a mixed-use neighborhood of 1,800 residents with retail, arts and cultural offerings. CRDA is currently working to lock-in New Jersey developer The Michaels Organization for the first phase of the project, dubbed "Bushnell South." Michaels' tentative proposal includes 360 apartments and 2,500 square feet of retail space on a 2.8-acre site at 165 Capitol Ave., with development costs estimated at $129.6 million. Meantime, Spinnaker Real Estate Partners is converting the nearby former state office building at 55 Elm St., into 164 apartments. CT portfolio Sarot, 36, said he got his start early on in single-family home construction around Long Island, before moving into real estate management and multifamily property investment. In July, he paid $900,000 for a 62-year-old, 18,000-square-foot Hartford office building on Farmington Avenue, near the West Hartford border. The building is largely geared toward medical offices. Sarot took one office for the local headquarters of his real estate invest- ment business Zenith Equity Group. He began investing in Connecticut in 2021 and now owns 130 to 140 apartment units in Hartford, West Hartford and Vernon. Sarot said he's also planning a 32-unit redevelop- ment of a New Britain property he's eyeing for purchase. Ten of his existing apartment units are currently renting through short- term online rental website Airbnb. That model has worked so well, Sarot said he is contemplating using it to rent some portion of 385 Main St. He would, however, need a special permit from the city before doing so. Shlomo "Sam" Sarot and a partner recently paid $3.97 million for the 28-unit apartment building at 385 Main St. in Hartford. HBJ PHOTO | MIKE PUFFER

• Cover