Hartford Business Journal

6 HARTFORDBUSINESS.COM | NOVEMBER 27, 2023 DEAL WATCH being put on hold in anticipation of future interest rate reductions, he said. "It's still a strong segment," Morris said. "Just because people are not putting up new buildings all the time, it doesn't mean it's not stable. And lease rates are still relatively high." Brannan Knott, a managing director of JLL Capital Markets, said investors are influenced by an ongoing push to move procedures from inpa- tient hospital settings to less-expensive outpatient facilities. "The move is to deliver care in a lower-cost setting," Knott said. Insurers and government programs are increasingly interested in having expensive procedures performed in lower-cost outpatient settings, Knott said. Investors are responding by buying outpatient medical office buildings, he said. Knott was part of the JLL team that brought Sendero and New York- based Angelo Gordon together. Since that partnership was hatched earlier this year, Angelo Gordon was acquired by San Francisco-based real estate management firm TPG Inc. Angelo Gordon now operates as TPG Angelo Gordon, a $74 billion real estate investment firm within TPG. Investors look to medical office space as a safe-haven in uncertain economic times, Knott said. During the 2008-09 global finan- cial crisis, the U.S. medical office sector experienced only two quarters of shrinking net operating income, Knott said. At the time, occupancy rates nation- ally fell from around 92% to 91%. "We are steady Eddie," Knott joked. "If you think about it, if you break your arm, you are not going to think about whether you can afford it or not, you are going to seek help, and then you are going to figure out how to pay for it." Craig Way, managing director of Greenwich-based HB Nitkin, told attendees at an Oct. 16 meeting of the Connecticut and Western Massachusetts Chapter of SIOR, that his real estate investment company has bought "four or five" medical office properties over the past five years. HB Nitkin doesn't compete with big real estate investment trusts on "institutional-quality" medical prop- erties, but focuses on smaller, less amenitized Class B spaces in well- placed markets, Way said. "We love medical," Way said. "They say: 'sticky medical.' You sign up a tenant for 10 years and usually they are there for much longer than that." Craig Way Brannan Knott Developers pitch mixed-use redevelopment of East Hartford's Silver Lane Plaza By Michael Puffer mpuffer@hartfordbusiness.com E ast Hartford's search for an investor to redevelop the 22-acre Silver Lane Plaza site has drawn a single response, with a development team proposing a mix of retail space and up to 93 tightly packed, small lots designed for facto- ry-built modular homes. The development team responded to a request for proposals issued by the town. The group is composed of industry veterans, including Framingham, Massachusetts-based Grossman Development Group, Charter Realty Principal Daniel M. Zelson and Jason C. Hess, a real estate attorney with New York-based mixed-use developer Leyland Alliance. Collectively, the partners say they have helped complete millions of square feet of ground-up develop- ment and redevelopment valued at more than $1.5 billion. Charter Realty paid $40 million for West Hartford's Blue Back Square in 2021, and has since filled vacant retail and office space within the 500,000-square-foot property with a variety of new tenants. Leyland and Charter were partnered in the "Storrs Center" development in Mansfield, creating a mixed-use town square near UConn's main campus. Grossman is currently building a sprawling mixed-use develop- ment along the Berlin Turnpike in Newington that will yield a 269-unit luxury apartment complex and 78,000 square feet of retail space. 3 options East Hartford took control of the 22-acre Silver Lane retail plaza last spring by eminent domain. It paid $4.5 million for the property, which officials said was suffering from lack of invest- ment and increased vacancies. The town claimed the property with plans to demolish three vacant buildings on-site and find a developer to put it back into productive use. Responses to the town's RFP were due earlier this month. The Grossman/Zelson/Hess team was the only respondent. East Hartford Director of Devel- opment Eileen Buckheit said the town will vet the proposal, and has the right to seek a new round of appli- cations if necessary. The applicant's response included three development possibilities that require further study. The options include: • A development of five, 1-acre retail or restaurant pad sites, stretched along the frontage of Silver Lane, with 93 closely packed, single- family lots behind intended for factory-built, modular homes. The lots would be 1,800 to 2,200 square feet, supporting individual homes of 900 to 1,400 square feet, according to the application. There would also be a clubhouse and pool. • A 150,000-square-foot retail site for a "big box" retailer on the south- western corner of the property (by the intersection of Applegate and Silver lanes), two freestanding retail buildings totaling 14,000 square feet on the southeastern corner, and 65 tightly packed lots for factory-built modular homes of 900 to 1,400 square feet. • A shopping plaza along the Silver Lane frontage, with a 20,000-square- foot anchor grocery store and three additional retail buildings adding another 30,000 square feet. This option would also include 65 tightly packed, single-family lots intended for factory-built modular homes of 900 to 1,400 square feet. It's not clear from the application if the aim is to sell or lease the residen- tial lots. Attempts to reach a repre- sentative of the development team were not successful. Michael Goman, a principal at real estate consulting firm Goman + York, said East Hartford is looking for development that will add value and complement nearby redevelopment projects. Goman, who consults for the town of East Hartford, noted the applicants come with a wealth of experience. "They are coming in with a strong track record as very capable people," Goman said. "They've obviously done initial due diligence. The question is, can we find a meeting of the minds between their development plan and what the town aspires to have happen there?" The developers are proposing to buy the property for $1, following a due-diligence period. They want the town to demolish and clear the three retail buildings and hand over the property clear of environmental hazards. A development team has proposed three redevelopment options for the Silver Lane Plaza in East Hartford. Those options are outlined above. RENDERINGS | CONTRIBUTED They also want the town to waive permit fees and fund any needed infrastructure upgrades, according to the proposal. Medical office occupancy rates for Hartford, Middlesex and Tolland Counties 100 80 60 40 20 0 AVG. OCCUPANCY % 93.6% 3Q2018 3Q2019 3Q2020 3Q2021 3Q2022 93.4% 92.9% 93.1% 92.9% Source: Revista

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