Hartford Business Journal

14 HARTFORDBUSINESS.COM | APRIL 6, 2026 Market Imbalance Continued from page 13 "There's a dual impact," the mayor said. "I think it helps stabilize the value of housing. It helps stabilize the value of the commercial properties if we can start to convert enough of them into residential. And it also expands the property tax base by bringing new units online that were not part of the equation before." Hartford is collaborating with part- ners — including the state Department of Economic and Community Develop- ment and Capital Region Development Authority (CRDA) — to identify oppor- tunities to convert vacant commercial properties into housing. Since its creation in 2012, CRDA has used state bond funding to provide low-in- terest loans supporting about 3,400 apartments in Hartford, including 830 currently under construction. Projects adding another 750 units are under consideration for CRDA support. The city is also exploring use of a $50 million "greyfields" grant fund authorized by state lawmakers last year to redevelop obsolete office and retail properties. Meanwhile, some of the city's top corporate leaders are advancing a broader revitalization effort through a "Vision Committee" led by Christopher Swift, chairman and CEO of The Hart- ford. The group has retained global planning firm Streetsense to help prior- itize redevelopment initiatives, with a report expected in June. Streetsense Managing Director Larisa Ortiz said the city needs roughly 10,000 additional downtown residents to support retail, restaurants and potentially a grocery store. How many can be added will depend in part on an ongoing city-funded study examining vacant or underused office space and its potential for conversion to housing, hotels or other uses. A separate 2025 study by Econsult Solutions Inc., funded by LAZ Invest- ments and Shelbourne in coordination with the MetroHartford Alliance, underscored the decline in downtown office values. It recommended $450 million in state incentives over three years to stabilize and convert struggling prop- erties, noting that 41% of office space is currently available or soon will be, with four office towers in receivership and millions in lost tax revenue. Amid market struggles, several of Hartford's large office towers could exit foreclosure By Michael Puffer mpuffer@hartfordbusiness.com S everal of Hartford's largest downtown office towers — including Constitution Plaza, Metro Center and the 38-story City Place I building — are nearing potential sale or settlement after years in foreclosure and receivership, as lenders and court-appointed receivers move to resolve the distressed properties. The deals could provide some of the first clear post-pandemic bench- marks for downtown office values, a key issue as Mayor Arunan Arulam- palam seeks to delay this year's revaluation amid concerns declining commercial values could shift more of the tax burden onto homeowners. Chris Ostop, managing director at real estate services firm JLL, said delaying the revaluation — required by state law every five years — could allow pending sales to close and establish more accurate pricing for downtown office buildings. "From what I am hearing, a lot of these buildings are finally coming to the point where they're likely going to be sold," Ostop said. "That will absolutely determine exactly where the fair market is. So, the city could be right (in trying to delay the reval- uation) in the sense they will have a clearer line of sight in 12 months." He added that properties could trade at significantly reduced prices, clearing debt and legal claims while opening the door for new investment. Constitution Plaza One of the most closely watched properties is Constitution Plaza. In October 2025, Hartford Supe- rior Court Judge Claudia A. Baio approved the foreclosure of the six-building office complex totaling 670,626 square feet. Lender Wilmington Trust and its special servicer, LNR Partners, filed suit in January 2024, alleging Monsey, New York-based Constitu- tion Plaza Holding LLC failed to repay a $55 million loan that matured May 6, 2023. The ruling was in favor of Dela- ware-registered JPMDB 2018-CA Constitution Plaza LLC, which became the majority debt holder in 2024 and took over as lead plaintiff. In her decision, Baio cited an appraisal valuing the property at $13 million — well below the roughly $50.9 million owed. The foreclosure had been sched- uled to take effect Dec. 22, but has been delayed several times as the lender and property owner pursue a potential sale. A March 3 court filing states the parties entered a cooperation agree- ment allowing a court-appointed receiver to market the property and attempt a third-party sale outside of foreclosure. Metro Center The 12-story "Metro Center" office tower at 350 Church St. could also soon hit the market. Receiver David Fagone, of RM Bradley Management Corp., filed a motion in March seeking permission to market and sell the 293,639-square-foot building, along with an adjacent parking lot. Fagone was appointed in January 2025 by Superior Court Judge Matthew Dallas Gordon as part of a foreclosure lawsuit filed by Webster Bank against the property's owner, Brooklyn, New York-based Shel- bourne Global Solutions. Shelbourne paid $49 million for the building in 2017. Court records show about $34 million remains due on the mortgage, while the property's value has fallen to about $18 million. Fagone's motion requests a $5,000 marketing budget and approval to compensate a listing broker with a 2.5% commission on the gross sale price. In a statement, Shelbourne said it remains actively engaged in resolving the situation at Metro Center and is pursuing a path that reflects current market conditions. The firm said many downtown office properties remain under finan- cial pressure, in part because lenders have been slow to adjust valuations following pandemic-era shifts in demand. As those adjustments occur, Shelbourne said, it expects conditions to improve and support a broader recovery in Hartford's office market. City Place I At the same time, a court-ap- pointed receiver is moving to sell the 884,669-square-foot City Place I office tower by Nov. 30. In a March 27 Hartford Superior Court filing, receiver Lewis Taulbee, of JLL, requested approval to hire CBRE to market the 38-story prop- erty. The brokerage would earn a 2% commission, or $500,000, whichever is greater. Boston-based Paradigm Properties bought the tower at 185 Asylum St. for $113.2 million about a decade ago, financing the deal with a $79.27 million loan originated by Wells Fargo and later transferred to investors, with Wilmington Trust serving as trustee. In December 2024, Wilmington Trust filed a foreclosure complaint stating the property-owning entity acknowledged it could not meet its debt obligations and consented to a receivership. A March court report shows the building is 45.9% occupied but continues to operate "smoothly," with ongoing leasing activity. So far this year, one lease has been renewed and one terminated, following eight renewals and one termination in 2025. Other key building in flux Shelbourne appears close to resolving a foreclosure case tied to another of its Hartford holdings — the 420,000-square-foot, 23-story office tower at 20 Church St., commonly known as the Stilts Building. Wells Fargo filed for foreclosure in 2022, alleging missed payments on a $31 million mortgage. The bank later demanded repayment of a $25.7 million outstanding balance and moved forward with the case. On March 20, attorneys for both sides jointly requested a pause in proceedings, indicating they had reached a settlement agreement that includes paying off the loan by June 18. Shelbourne declined to comment on specific details of the pending transaction, citing ongoing proceed- ings, but said it is "very enthusiastic" about the opportunity to reposition the property. The firm said it views the Stilts Building as a candidate to be restored as a "premier, first- class" downtown office tower and expressed confidence in both the property and Hartford's long-term market outlook. The Metro Center office tower at 350 Church St., in Hartford. Photo | CoStar The City Place I office tower in downtown Hartford. Photo | CoStar The Stilts Building at 20 Church St., in Hartford. Photo | CoStar

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