Hartford Business Journal

HARTFORDBUSINESS.COM | JULY 10, 2023 9 Office-to-manufacturing space conversions less common, but possible By Hanna Snyder Gambini hgambini@hartfordbusiness.com T ater Baseball's new manufacturing space in Cheshire is an office-to-in- dustrial property conversion that works, commercial real estate experts said. But it may not serve as a broader industry trend, even though industrial space remains in high demand, while office space struggles to fill vacancies brought on by the wider adoption of hybrid and remote work. The biggest issue is ceiling heights, said Nick Morizio, Hartford president of property broker Colliers International. A typical office building has 9-foot high ceilings, he said. "Most manufacturers typically need something that's 18- to 20-foot clear- ance," which is not often found in office buildings unless a floor is removed to open into another floor, Morizio said. For landlords or developers, office space is more likely to be converted to apartments or retail, or "whatever they could change it to so that it becomes useful again versus just knocking it down." Morizio said he typically sees self- storage facilities converted into small industrial sites. But several developers are meeting the growing demand for small industrial spaces by building new. For example, a Longmeadow, Mass., developer is planning to build a 19,800-square-foot multi-tenant industrial building with individual spaces for 11 contractor workshops on Moody Road in Enfield. It will be leased by companies doing light manufacturing and assembly work, according to plans. In Suffield, local electrical company owner Kevin Deming is looking to build a multi-tenant industrial contractor facility on his East Street South property, with a 12-bay storage facility available for rent by trade workers. An investment group is planning a multi-tenant flex space development in South Windsor, with 26 individual spaces for contractors. "On the industrial side, there's no ques- tion there's a shortage, and tenants have to get imaginative," said Mark Duclos, owner of Hartford-based commercial property brokerage firm Sentry Commercial. He said he's seeing some flex space shifting away from office and back into industrial use, typically providing around 5,000 to 15,000 square feet for tenants. But even flex space is in high demand, with vacancy rates in Greater Hartford around 10% to 15%, Duclos said. "We are seeing instances where flex buildings are now being stripped back to industrial buildings. They were built to do that," he said. DEAL WATCH Hartford's development strategy hinges on tax-fixing agreements By Greg Bordonaro, Michael Puffer, Hanna Snyder Gambini and Michelle Tuccitto Sullo I n an effort to jump-start devel- opment in three key areas in or near downtown Hartford, city officials want to establish various tax-fixing agreements they say will make it more attractive for devel- opers to build mixed-use projects. Mayor Luke Bronin and the city council are considering tax-fixing agreements for future developments that occur at: Rensselaer Polytechnic Institute's former Hartford campus; existing buildings and empty parking lots near the Bushnell Theater; and a vacant parking lot in the Parkville neighborhood. Tax-fixing agreements are nothing new for the city of Hart- ford, which has one of the highest property tax rates in the state at 68.95 mills. That, and other factors, make it more expensive to build in the city compared to the rest of the state. The cost to build in Connecticut, in general, is higher than most parts of the country. Tax-fixing deals essentially give developers a temporary lower property-tax rate. Here's a look at the deals city officials are considering: RPI campus Bronin has proposed a 20-year tax-fixing agreement for any development that occurs at RPI's former Hartford campus, at 275 Windsor St., which went up for sale earlier this year. The 12.7-acre property features two existing buildings, including a nine-story, 148,881-square- foot commercial building, and a four-story, 179,744-square-foot parking garage. The site has been vacant since 2020, and the city wants to attract a developer willing to either re-use the existing facility or support new construction, to transform the site into residential apartments and commercial space. The property currently has an assessed value of $1.19 million, with an annual tax bill of $82,050. Bronin's proposal would fix the assessed value of the property so the annual tax bill remains at about $82,050 for five years. After that, the tax rate would be adjusted at five-year intervals, up to the 20-year mark, based on a percentage of gross revenues produced by any development. Parkville Bronin also wants a tax-fixing agreement for an underutilized parking lot at 17 Bartholomew Ave., in the city's Parkville neighborhood. The lot is owned by promi- nent developer Carlos Mouta, who is seeking to build a $16.72 million mixed-use residential development. Mouta plans to subdivide the property into two parcels. Parcel A would contain a new multi-story building with 57 apartments, 30% of which would be affordable, and first-floor commercial space. That project would be partially financed by a $5.5 million state grant. Bronin is requesting a 15-year tax abatement. The city would take ownership of parcel B and enter into a devel- opment agreement and long-term lease of the parking garage. Mouta and the city would evenly split parking revenues. Bushnell South The city is also considering a tax-fixing agreement program for redevelopment in the "Bushnell South District," which includes 15 properties bounded by Elm, Trinity, Hudson, Buckingham and Washington streets in downtown Hartford. The tax-fixing agreements would cover the construction period of any new development, and last up to 15 additional years. An estimated $200 million in housing and mixed-use devel- opments are currently targeting the roughly 20-acre area south of Hartford's Bushnell Park. Ultimately, the master plan calls for about $400 million of invest- ment in a new neighborhood of approximately 1,800 residents in 1,200 households, and more than 63,000 square feet of retail, cultural and commercial space. Within the district, Spinnaker Real Estate Partners has already launched a $67 million transformation of a former state office building at 55 Elm St., into 164 apartments. A rendering of the 233 apartments New Jersey-based The Michaels Organization has planned for a 2.8-acre parking lot south of Hartford's Bushnell Park. Carlos Mouta Nick Morizio Mark Duclos

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