Hartford Business Journal

6 HARTFORDBUSINESS.COM | MAY 29, 2023 Deal Watch The CT Lottery Corp. signed a long-term, 136,615-square-foot lease in this Wallingford mixed-use industrial/office building at 15 Sterling Drive, where it will relocate its headquarters. PHOTO | COSTAR CT Lottery Corp. will relocate Rocky Hill headquarters, other offices to Wallingford this summer By Michael Puffer mpuffer@hartfordbusiness.com W hen Gregory Smith was hired to lead the Connecticut Lottery Corp. five years ago, the organization was spread out over several loca- tions. With the lease on its nearly 92,000-square-foot Rocky Hill head- quarters coming to an end in June, that will soon change. The lottery this summer will consolidate its footprint into one building and relocate its headquarters to Wallingford. It has signed a long-term, 136,615-square-foot lease in a large Wallingford mixed-use industrial/office building at 15 Sterling Drive. "It's about taking everything we do now and putting it under one roof," Smith said during a recent interview. The new Wallingford location will house the lottery's corporate offices, online betting back-office operations, warehouse space (for scratch ticket pallets and other items) and even a TV studio where instant-game draw- ings will be broadcast. The lottery has signed a 10-year lease, with the possibility for three, five-year extensions. It will occupy 50,931 square feet of newly built office space and 85,684 square feet of warehouse space in the 44-year-old, 172,000-square-foot light industrial building. The property is owned by Sapphire Group 151 LLC, whose principal is Shlomoh Rosenbaum, of Lakewood, New Jersey. Sapphire purchased the building in 2018 for $5.65 million, town records show. The remainder of the building is occupied by MRC Global, a distrib- utor of pipe, valve and fitting products and services for energy and industrial markets. A broad search The lottery's real estate search was led by brokerage and advisory firm CBRE. "We started with a flexible client and a wide geography," said John McCormick, executive vice presi- dent for CBRE. "It was an exhaus- tive search. I think that's a testament to Greg Smith's leadership at the lottery." The lottery looked at industrial and office sites as well as the potential for new construction, involving staff from different departments, including legal, procurement, facilities maintenance and even security, McCormick said. The Wallingford site is well matched to the commutes of existing employees. Also, the town generates its own power, which will allow the lottery to save 25% or more in elec- tricity costs, McCormick said. CBRE's Christopher Metcalfe and Anna Kocsondy were also involved in the lease deal. Hartford broker Mark Duclos, owner of Sentry Commercial, represented the landlord in the lease, which he said was signed last November. It goes into effect once about $9 million in ongoing building upgrades and renovations are completed. "The impact for 15 Sterling is significant," Duclos said. "It was all available vacant space, able to sign a long-term lease with a significant credit tenant." Duclos, his son Chris Duclos and Stephanie Romano of Sentry repre- sented Sapphire. The PAC Group, of Torrington, is the general contractor for the extensive renovation project. Smith said the lottery looked at about 15 central Connecticut proper- ties over six months before agreeing on the Wallingford site. It offers the space and proximity to highways needed for the lottery's operations. The ceiling heights in the Walling- ford warehouse are shorter than the current Rocky Hill location, which created the need for additional square footage, Smith noted. Even so, and despite renovation costs, the consolidation will save the lottery money long term, Smith said. The first year of the Wallingford lease will cost about $1 million, gradually escalating to $1.36 million by year 10. According to the lottery, it had been paying nearly $1.92 million a year for leases in four separate locations, one of which it recently surrendered in anticipation of a move this August. Its Rocky Hill landlord is allowing monthly lease extensions until the lottery can relocate, Smith said. The lottery, which employs more than 140 people and generated $1.6 billion in operating revenue in fiscal 2022, has experienced growth in recent years, after launching online and retail sports betting operations in 2021. Wallingford Economic Develop- ment Commission Chairman Joe Mirra said the lottery's move is a win for the town because it fills up some vacant commercial space and brings in new potential customers for local businesses. "This will generate economic benefit to the local merchants and that's always a good sign," Mirra said. "We are happy to have them, and we look forward to supporting them and servicing them and their employees." $2B $1.5B $1B $500M $0 2017 2018 2019 2020 2021 2022 $1.22B $1.27B $1.33B $1.31B $1.46B $1.6B FISCAL YEAR OPERATING REVENUES Source: CT Lottery annual reports CT LOTTERY CORP. OPERATING REVENUES Gregory Smith

• Cover