Hartford Business Journal

6 HARTFORDBUSINESS.COM | DECEMBER 11, 2023 DEAL WATCH It also allows bioscience companies to "spend all their time and effort on the development of science, instead of constructing space," Winstanley said. Chris Ostop, a managing director at brokerage and consulting firm JLL in Hartford, said he expects long-term demand for lab space in New Haven to continue to grow. As startups from Yale and else- where outgrow incubator space, they will need a larger, more permanent home, hopefully choosing to remain in the Elm City, he said. Josh Geballe, a senior associate provost for entrepreneurship and innovation at Yale University, said the creation of new, state-of-the-art lab space helps Connecticut better compete for companies that may be attracted to larger bioscience hubs in Cambridge, Massachusetts, New York or California. Geballe, who previously worked for Gov. Ned Lamont's administration, noted that New Haven is also far less expensive than those markets, while still offering a high quality of life. New Haven lab space rents range from $30 to $50 per square foot, according to Cushman & Wakefield. The proximity to learning institu- tions like Yale also helps increase the chances of a company's success, Geballe said. Bullish outlook The current slow down in leasing activity doesn't mean there won't be a need for additional life science space in the near- or long-term future, experts agree. But there likely won't be a building boom, given the high cost to construct lab space. Infrastructure at buildings like 101 College St. — from power supply, flooring and air filtration systems — must be robust and is expensive, experts said. When the 101 College St. project was pitched, core and shell work was estimated to cost roughly $100 million, but tenant-specific fit-outs brought the overall price tag to $250 million, Winstanley said. New construction also has a lengthy lead time, typically two years, Winstanley said, meaning prospec- tive tenants "have to think pretty far ahead because there's not a lot of vacancy in New Haven. When new construction is announced, it's typical to see high demand right away." The organic growth from Yale, Yale New Haven Hospital and other companies in the state's life sciences sector, including from UConn in Storrs and Farmington, will ensure that demand for new or converted lab space continues, Winstanley said. But efforts to add new lab space will occur in a "highly measured, highly calculated and extremely thought-out way," said Motley, of Cushman & Wakefield. Winstanley did not disclose any potential new life science-related real estate developments in New Haven, but he said he remains open to addi- tional opportunities in the city. "There are very few markets in the country and the world where you can grow a life sciences cluster," Winstanley said. "Overall, we remain very bullish on the New Haven market and continue to look for additional opportunities." KeyBank to vacate New Haven office space; former CT Market President Barger departs By Greg Bordonaro gbordonaro@hartfordbusiness.com O hio-based lender KeyBank, which established a major Connecticut presence following its 2016 acquisition of First Niagara Financial Group, will vacate its New Haven office space by the end of this year amid a wider embrace of remote and hybrid work models. KeyBank, which has $192.8 billion in assets, will leave its third-floor office space at 195 Church St. as of Dec. 31, according to company spokeswoman Karen Crane. About a dozen employees have assigned space in New Haven, including several commercial and business bankers, credit specialists, and some back-office employees. The rest is shared space for mobile workers, Crane said. There will be no layoffs associated with the office closure, Crane said, and New Haven-based employees have the choice to work out of KeyBank's other Connecticut offices, including in Hartford, Shelton, Hamden, Norwalk and Manchester. "This is a business decision based on the increased mobility of a portion of our workforce and an underutili- zation of the space at this location," said Crane, adding that the KeyBank branch on the lobby level of 195 Church St. will remain open. Large corporate employers across the country have been reducing their office footprints in recent years amid a wider embrace of remote work, which was made more popular during the pandemic. At the end of the second quarter, the 3.3 million square feet of office space in New Haven's central business district had a vacancy rate of 13.5%, according to brokerage firm Cushman & Wakefield. Leadership change KeyBank also confirmed a recent local leadership change. James Barger, who previously was KeyBank's Connecticut market president, is no longer with the bank, Crane said. The 195 Church St. office building (shown in the center) in New Haven. PHOTO | COSTAR In July 2022, Barger relocated from Connecticut to Boston to become commercial banking executive for all of New England. "At KeyBank, we are always eval- uating our business strategy to make sure we are delivering value for our Chris Ostop many stakeholders, including clients, communities, teammates, and share- holders," Crane said when asked about Barger's departure. "This includes reviewing our organizational structure to make sure we are best aligned to meet our clients' needs in an ever-changing competitive land- scape. We recently announced some structural and leadership changes aimed at increasing operational efficiency and making it easier for our clients to do business with Key." Matt Hummel remains the president and commercial banking market executive for KeyBank's Connecticut and Massachusetts market. As of June 30, 2023, KeyBank had 48 branches and $4.7 billion in deposits in Connecticut, according to Federal Deposit Insurance Corp. data. New Haven office market statistics* Inventory Vacant space Vacancy Year-to-date absorption Avg. asking rent (sq. ft.) (sq. ft.) rate (sq. ft) (per sq. ft.) CENTRAL BUSINESS DISTRICT 3,348,323 452,065 13.5% 80,840 $28.02 PERIPHERY 2,477,213 382,098 16.4% 8,102 $25.29 *Data as of end of second quarter 2023 | Source: Cushman & Wakefield

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