Hartford Business Journal

6 HARTFORDBUSINESS.COM | OCTOBER 28, 2024 Deal Watch A panel discusses the current state of Connecticut's office market at HBJ's recent real estate event. The panelists included (from left) developer and landlord Mark Greenberg, Chris Ostop, managing director of JLL Connecticut, and John McCormick, executive vice president at CBRE. HBJ PHOTO | BRIAN AMBROSE Urban 'flight-to-quality' trend continues as companies seek out more vibrant office settings overall downtown Hartford office vacancy rate of 35% at the end of the second quarter. Other landlords have said the true downtown office vacancy rate is closer to 40%, when soon-to-expire leases are taken into consideration. The office market nationally has taken a beating since the 2020 COVID-19 pandemic, which led to the wider adoption of remote work, giving companies an incentive to downsize their office footprints. However, employers are increas- ingly mandating workers to return to the office for at least part of the week. That's led to some increased leasing activity. For example, besides the Realtors Association, downtown Hartford recorded several other significant lease deals during the third quarter of this year. Law firm Pullman & Comley and the city of Hartford renewed leases at 90 State House Square and 280 Trumbull St., respectively, while law firm Jackson Lewis moved from 90 State House Square to 10 State House Square, according to CBRE. By Hanna Snyder Gambini hgambini@hartfordbusiness.com C ompanies migrating from the suburbs to downtown Hart- ford remains an active trend, real estate experts said, despite an overall slow leasing environment that has significantly elevated office vacancy rates. The latest organization to make the move was the Connecticut Association of Realtors, which recently relocated its 13 employees into a 9,700-square- foot space at 90 State House Square, in downtown Hartford. The group moved from an East Hartford office building, at 111 Founders Plaza, that is slated for redevelopment. CT Realtors, a trade group that advocates on behalf of real estate agents in Connecticut, was attracted to the city's central business district due to its proximity to the state Capitol and access to on-site parking, said Kristi Olds, the organization's communications director. Other companies have recently made similar moves, including envi- ronmental engineering firm Fuss & O'Neill, which this year relocated from Manchester to downtown Hartford's Gold Building, where it occupies about 25,000 square feet of space. National law firm Gordon Rees and CARMAC, the corporate office of Enterprise Rent-A-Car, also moved this year to the Gold Building, relo- cating from Glastonbury and Windsor Locks, respectively. Other suburban companies that migrated to Hartford in recent years include PES Structural Engineers and insurers Talcott Resolution, Selective Insurance and SunLife Financial. The urban migration trend was one of many topics discussed at Hartford Business Journal's second annual "Cranes & Scaffolds: Building Connecticut's Future" real estate event, which took place Oct. 9 at the Aqua Turf Club in the Plantsville section of Southington. John McCormick, an executive vice president at real estate services firm CBRE in Hartford, participated in an office market panel discussion. He said, on average, about 75,000 square feet of downtown Hartford office space has been leased annu- ally over the last decade by tenants that moved from the suburbs. It's a trend that has been spurred by an increasing number of compa- nies seeking out higher-quality and amenitized buildings in walkable downtowns. That "flight to quality and amenity-rich spaces" has become even more important post-pandemic, McCormick said, as employers try to entice workers back to the office. Companies want to be in buildings that offer, or are near, modern food courts, fitness centers, restaurants and cafes, he said. Decades-long efforts to add more amenities in Hartford — like Dunkin' Park, the Front Street Entertainment District, new apartments and restau- rants — have made the city more attractive, McCormick said. Hartford also offers a discount compared to more competitive office markets in West Hartford and Glastonbury. Lease rates for space in West Hartford Center, for example, average $40 to $45 per square foot, whereas in downtown Hartford, it's closer to $21 to $25 per square foot, McCormick said. 'Cultural miss' Yet, despite several high-profile moves, Hartford still has a stubbornly high vacancy rate. Just how high depends on who you ask. CBRE put the downtown Hartford office vacancy rate for Class A buildings at 26.7% at the end of the third quarter, while real estate firm Cushman & Wakefield calculated an NOTABLE 3Q GREATER HARTFORD LEASE DEALS TENANT DEAL TYPE DEAL SIZE (IN SQ FT) PROPERTY ADDRESS LOCATION PULLMAN & COMLEY Renewal 36,486 90 State House Square Downtown Hartford CITY OF HARTFORD Renewal 28,492 280 Trumbull St. Downtown Hartford JACKSON LEWIS P.C. New lease 18,597 10 State House Square Downtown Hartford RBC CAPITAL MARKETS LLC Renewal 11,143 30 Batterson Park Road Farmington CT ASSOC. OF REALTORS New lease 9,765 90 State House Square Downtown Hartford Source: CBRE

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