Hartford Business Journal

HARTFORDBUSINESS.COM | FEBRUARY 5, 2024 7 Deal Watch The 80,524-square-foot office building at 5 Waterside Crossing in Windsor recorded two new lease deals in the fourth quarter of 2023. Great American Insurance Group renewed and expanded its lease to 33,025 square feet, while fellow insurer Swiss Re renewed a 12,051-square-foot lease, according to CBRE. PHOTO | COSTAR CBRE: Greater Hartford office tenants added 81,944 sq. ft. of net space in 4Q Class A attraction Office leasing in the fourth quarter focused on newer, amenitized Class A buildings, which captured 83% of activity, CBRE reported. This falls in line with another post-pandemic trend. Even as they shrink their office footprints, many companies have sought out higher-end space at newer or renovated buildings with amenities that can attract workers back to the office. Hartford's central business district led all submarkets, with 80,000 square feet of leasing activity in the fourth quarter, according to CBRE. That's up 40% from the prior quarter. Part of that increase was driven by law firm McCalla Raymer Leibert Pierce relocating within Hartford from Weston Street to 280 Trumbull St., in downtown. Downtown Hartford's office vacancy rate was above 27% at the end of the fourth quarter, according to CBRE. Hartford's suburbs saw 94,000 square feet of leasing. The "Hartford West" market, which includes West Hartford, Avon and Farmington, led among the suburbs, with 16 new leases occupying 36,000 square feet, according to CBRE. The average deal size was 2,200 square feet. By Michael Puffer mpuffer@hartfordbusiness.com A lthough battered by the post-pandemic shift to remote work, Hartford County's office market managed to chalk up a second consecutive quarter of occupancy gains to round out 2023, according to the latest CBRE market report. Tenants added 180,326 square feet of office space in the fourth quarter of 2023, according to CBRE. Including space that was vacated, the region netted 81,944 square feet of positive absorption in the quarter. However, that doesn't mean the post-pandemic pressures on the office market are in the rearview mirror, said CBRE Senior Vice President Michael Puzzo. Greater Hartford office tenants still shed a net 73,000 square feet of space for all of 2023, Puzzo noted. There would need to be at least two additional quarters of positive space absorption before any conclu- sions can be drawn about shifts in the office leasing market. Since the pandemic hit in 2020, many office tenants have sought out smaller spaces and short-term leases as they embrace hybrid work models and try to reduce real estate costs. While office rents have stabilized (to $20.46 per square foot in the fourth quarter), higher vacancy rates have left tenants with the upper hand, Puzzo said. Landlords are offering longer rent-free grace periods and more money for tenant fit-outs, he said. Hartford County still had a rela- tively high availability rate of 27.6% at the close of the fourth quarter. That is down 30 basis points from the prior quarter, but up 30 basis points from the close of 2022. One of the largest deals during the fourth quarter was Great American Insurance Group's lease renewal and expansion, at 5 Waterside Crossing in Windsor, to 33,025 square feet. Fellow insurer Swiss Re renewed a 12,051-square-foot lease in the same property, according to CBRE. GREATER HARTFORD OFFICE MARKET SNAPSHOT (4Q 2023) Buildings ..........................................400 Inventory .................... 25.98M sq. ft. Vacancy rate ............................. 27.4% Availability rate ........................ 27.6% Avg. asking rent (per sq. ft.) ...... $20.46 Source: CBRE $70M addition approved for Baker Hollow Logistics Center in Windsor An outline of two warehouses Condyne Capital Partners plans to add to its Baker Hollow Logistics Center in Windsor. IMAGE | CONTRIBUTED By Hanna Snyder Gambini hgambini@hartfordbusiness.com A real estate development firm has won town approval to construct two industrial build- ings totaling 420,000 square feet on Baker Hollow Road in Windsor. The $70 million project by Massa- chusetts-based Condyne Capital Partners will include 300,000-square- foot and 120,000-square-foot indus- trial warehouses that will become 75-85 Baker Hollow Road. The projects will add to Condyne's larger Baker Hollow Logistics Center, which features the existing 165,000-square-foot Safelite Auto Glass building, at 105 Baker Hollow Road, and another 185,000-square- foot building under construction at 205 Baker Hollow Road, off the Day Hill Road industrial corridor. Condyne Marketing Manager Lindsay Hurley said the new proj- ects are being built on spec, meaning there are no tenants lined up, but the company is working with JLL Hartford to bring in "high-quality tenants." Ideal uses for the properties include distribution, manufacturing, cold storage and more, and each building could have one or multiple tenants, Hurley said. Hurley said Condyne started with the building that now houses Safelite. Interest in that property was signifi- cant, so they moved forward with the 205 Baker Hollow Road project. "Industrial is still hot in Hartford, so we're taking advantage of that," Hurley said. When completed, the four-building campus will have 159 loading docks, parking for more than 500 cars and 218 trailer parking spaces. The logistics center is the first Connecticut project for Condyne, which has built other industrial prop- erties in Massachusetts. Polar Design Builders is the general contractor on the project, while Alford Associates is the civil engineer. Condyne officials said they are now working on permitting and anticipate a groundbreaking this summer.

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