Hartford Business Journal

8 HARTFORDBUSINESS.COM | SEPTEMBER 22, 2025 DE AL WATCH Panelists (from left to right) David A. DeMaio, Daniel Madrigal, Nicholas Morizio, Brian Ker and moderator Mark Duclos speak during Hartford Business Journal's Cranes & Scaffolds Commercial Real Estate Conference. HBJ Photo | Brian Ambrose Developers: CT is a 'great regional distribution hub,' but challenges exist to growing industrial market has a lot of problems, which none of them want to do, you're going to have to pay more rent." Ker said the Hartford region's industrial property vacancy rate has fallen to around 4.5%, while developers are hesitant to build — and banks are reluctant to finance — new construction due to rising costs and other factors. There are few options currently available for tenants seeking over 100,000 square feet, Ker said, leading to higher rents. The state's high energy costs and cost of living pose additional chal- lenges to the market, said DeMaio, of Pat Munger Construction. "That drives the cost of getting that widget out the door, and driving people either away from Connecticut or not coming in," he said. "That's a big deal." DeMaio agreed with Ker on the state's optimal location and lower lease rates, but he also pointed out that Connecticut has one of the most difficult permitting processes in the country, which acts as a major road- block to new development. "New England, in general, is very, very difficult. It's actually getting worse," he said of the local permitting approval process. "We've spoken a lot at some of our association meetings about trying to get legislative bodies to look at zoning regulations on a regional basis, versus a town-by-town basis." He said a developer can spend 18 months getting all the necessary municipal approvals before putting a shovel in the ground. "That costs people a lot of money," DeMaio said. Local resistance to new develop- ments in Connecticut and across the U.S. has also increased in recent years, creating further challenges, the panelists said. Madrigal, of Scannell Proper- ties, said it never hurts to foster a positive rapport with planning and zoning officials when trying to get projects approved. "When we're working with the tenant and we first meet with the town, some of them have literally rolled out the red carpet," said Madrigal. "They wanted the deal." By Michael Juliano mjuliano@hartfordbusiness.com C onnecticut has no problem attracting companies looking for warehouse space, but the state has significant challenges when it comes to building more of it, according to developers. "This is a great regional distribution hub," said Brian Ker, president of New York-based real estate investment firm Snowball Development, during Hartford Business Journal's third annual Cranes & Scaffolds Commercial Real Estate Conference held earlier this month at the Aqua Turf Club in the Plantsville section of Southington. Ker spoke on a panel that discussed the state's industrial real estate market. Other speakers included moderator Mark Duclos, president of Sentry Commercial; David A. DeMaio, president of Pat Munger Construction Company; Daniel Madrigal, director of develop- ment of Scannell Properties; and Nich- olas Morizio, president of Connecticut and western Mass., of Colliers. Ker said a lot of smart companies have already established large distri- bution footprints in the state, including Uline, a Wisconsin-based distributor of shipping, industrial and packaging materials that is building a 1.25 million- square-foot warehouse in Plainfield, and e-commerce giant Amazon, which plans to soon open its 17th distribution center in the state. "… Other tenants are going to come a little late to the game and realize they probably should have showed up three years earlier," Ker said. He pointed to New York's much higher industrial lease rates as a major reason why so many companies flock to Connecticut for space. He said leases in Westchester County, for example, are as high as $26 per square foot and require the tenant to also pay for property taxes, insurance and maintenance. By comparison, Snowball, which has been one of the most active buyers of industrial buildings in the state over the past year, is charging as low as $7 per square foot for some industrial proper- ties it owns in Connecticut, he said. Ker said lower lease rates and Connecticut's excellent location — with access to major highways and 23 million consumers within a 200-mile radius — should boost industrial real estate markets in Southington, Water- bury, Hartford and other towns and cities across the state. "How is Danbury not going to be a $15 market as tenants flee $25 rents?" he said. Lots of hurdles Still, there are many challenges impacting the industrial market, including a lack of available space. "It's just there's nothing out there," said Morizio, of Colliers. "Unless you're willing to go into an older building that The 33,000-square-foot former office building, at 525 Main St., was transformed into 42 apartments over the past year-and-a-half by developer Daniel Klaynberg, president of Spectra Construction & Development, and his partners, Matthew and Evan Levy. UConn is leasing 33 of the apart- ments for students, offering a mix of double-occupancy units at $11,734, and single-occupancy units at $13,888. The remaining units are being rented at "workforce" rates to the general public. So far, 38 students live in the building, which can accommodate 57 student residents overall. The brick building was converted to apartments as part of a $7.8 million renovation. A $2.1 million low-interest loan from the Capital Region Develop- ment Authority (CRDA) helped finance the project. 'Confidence in the city' Klaynberg and the Levy brothers are active in other Hartford developments. They are nearing completion of a $9.5 million conversion of the former city firehouse at 275 Pearl St., into 35 apartments and ground-floor restaurant space. CRDA provided a $2.86 million loan to support that effort. At 30 Laurel St., Spectra is spear- heading a $9.8 million transformation of a former office building into 47 apartments. The project, backed by a $3.52 million CRDA loan, is slated for completion by year's end. In addition, CRDA is backing a $20.8 million plan by Klaynberg and the Levy brothers to build an 84-unit apartment building on a parking lot behind 525 Main St. Construction is targeted to begin early next year. That project has qualified for a $7 million CRDA loan. Klaynberg said demand for Hartford apartments remains strong, with Spectra's local portfolio of 554 units consistently 95% occupied. "We really love developing here in Hartford, and we have a lot of confi- dence in the city," Klaynberg told the Hartford Business Journal. 'College town' The housing expansion comes as Hartford and UConn step up efforts to increase the university's downtown footprint. Developers are converting office space on Pratt Street into a dormitory — expected to open in fall 2026 — for about 200 UConn students. The school also recently began leasing 51,000 square feet of space at the PeoplesBank Arena for new research and clinical programs. Meanwhile, the university is opening a new dining hall at its Hartford campus in the former Hartford Times Building on Prospect Street. The facility will serve both students and the public. "Much like New York, much like Cambridge, this is going to be a college town more and more," Hartford Mayor Arunan Arulampalam. "You are going to see the presence of UConn filling this street, creating vibrancy, creating life in this corporate city, transforming this into a vibrant college town." Student housing Continued from page 7

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