Hartford Business Journal

www.HartfordBusiness.com August 28, 2017 • Hartford Business Journal 15 and store wholesale/retail merchandise as a convenient distribution hub nestled halfway between Boston and New York. A myriad of factors, realty experts say, have coalesced in a near perfect storm, rais- ing central Connecticut's profile as a desired logistics node to such eastern seaboard rivals as New Jersey, New York and Pennsylvania. A trucker shortage, too, is a key factor in the Hartford region's emergence, realty and logis- tics experts say. In a rare but significant sign of the region's resurging industrial sector, at least one industrial building is nearing completion as a so-called "spec'' — short for "speculative'' — development on Old County Road in Windsor Locks. Spec projects typically are built with few or no tenants yet signed. According to Hartford regional commercial property broker CBRE/New England, vacan- cies in Greater Hartford's industrial market fell to 8.5 percent at the end of the second quarter. Less available space usually signals higher rents ahead, especially for larger, higher-qual- ity industrial warehouses, said Christopher Metcalfe, first vice president at CBRE. Meantime, even older, smaller industrial buildings, ones with lower ceiling clearances and fewer loading docks and drive-in doors, are finding takers, Metcalfe and other brokers say. "It's becoming a landlord's market, depending on the size'' of the property, said Mark Duclos, president/co-founder of broker- age firm Sentry Commercial in Hartford. Duclos, whose Aug. 1 blog post highlight- ed for Sentry clients and prospects the cur- rent industrial market, said Sentry brokered recently a 60,000-square-foot lease north of Hartford, where the tenant had three sites from which to choose. Three years ago, there would have been double the choices. "If you want anything above 50,000 to 100,000 square feet of quality industrial space, that's a pretty tight market,'' Duclos said. For tenants seeking quality locations of 140,000 square feet or larger, most must have spaces built to specification, he said. One example is a 137,000-square-foot, high-bay industrial building going up in a Windsor business park at 330 Stone Road. Developer Griffin Industrial Realty, one of Connecticut's largest commercial landlords, has commitments for half the space to be completed this fall, said Tim Lescalleet, a Griffin senior vice president. Griffin plans to relocate one of its existing industrial tenants to the new building, and has found a taker for the space that tenant is vacating — more validation of the tight mar- ket, Lescalleet said. Concerns as to whether the industrial market will eventually swing to oversupply don't register right now, he said. "It's not a matter of whether the market will become overbuilt,'' Lescalleet said via email. "What we are experiencing is a new upward trend in industrial activity; one that requires larger format (i.e size, clear height, etc.) build- ings that are not readily available in this region." He added that it is likely that Griffin and other industrial developers "will attempt speculative projects in the future, to meet this demand, as well as continued build-to- suit development.'' If and when that happens, Lescalleet said, the industrial-warehouse market will essen- tially be divided, with rents for newer prod- uct appreciably higher than the older, smaller "flex" style warehouses that currently com- prise the bulk of the industrial market. Winstanley's big buy One of the most prominent indications of the vitality of Greater Hartford's industrial market, realty observers say, was the $124 million purchase last January of 10 proper- ties in Enfield by Massachusetts landlord- developer Winstanley Enterprises. Anchoring that portfolio was the 1.1 mil- lion-square-foot former Hallmark Greeting Cards distribution facility at 25 Bacon Road in Enfield — situated some four miles from I-91. Within 90 days of its purchase, Winstan- ley leased to Vertiv Corp. and Plastipak Pack- aging 465,000 square feet and 319,000 square feet, respectively, Duclos said. Winstanley followed up in May with the $2.9 million purchase of 56 raw acres in Enfield that some brokers say could be commercially developed, perhaps into an industrial park. The landlord also paid in May $8.5 million for Georgia-Pacific's former 170,076-square-foot warehouse at 100 Helmsford Way in Windsor. A short distance away, William B. Meyer Co. is finishing the second expansion to its facility at 175 Great Pond Road since erecting it in 2010. This latest addition covers 75,000 square feet and costs between $4 million and $5 million, raising its footprint to 271,000 square feet when it opens around October, said Ted Kennedy, the company's sales and marketing vice president. Rising demand for all three operations was the reason for investing in the latest expansion. The first occurred within two years of William B. Meyer occupying the building. The company also has facilities in Stratford; Bedford Hills, N.Y.; and in Northborough, Mass. But a second addition, Kennedy said, was not the first choice for the century-old, fam- ily owned enterprise that does commercial/ residential moving and storage for office and household furnishings and equipment; doc- ument/records storage; and contract fulfill- ment services. "We were actually looking to buy a build- ing,'' he said. "We couldn't find a place that could accommodate us. I don't know that [industrial has] ever been this tight in Connecticut.'' Ultimately, William B. Meyer officials decided their present Windsor location, which has room to expand, offered the best option logistically for their needs, Kennedy said. So, they chose to stay and expand. Indeed, Connecticut's proximity to the major metropolitan hubs and its freeway net- work increasingly are magnets to fulfillment operators like Amazon and 3PL, overnight deliverers such as United Parcel Service and FedEx, and retinues of trucking/courier operators and suppliers. Meantime, a shortage of truck drivers has forced shippers to adopt more short-haul routes to accommodate drivers who insist on sleeping in their beds, not on the road, observers say. In turn, more distribution facilities are popping up in or near major population centers, so goods ordered online can be on customers' doorsteps sooner. "It's been a really hot area for distribu- tion,'' Kennedy said. "Now, we're saying, 'Hey, Connecticut is a great place to be distributing to the East Coast.' '' n from page 1 More 'spec,' higher rents lie ahead BY THE NUMBERS Greater Hartford Industrial Realty Market Here's a snapshot of the industrial real- ty market encompassing 24 towns sur- rounding Hartford. 1,470 The total number of available industrial buildings. 73,468,571 Total square footage of industrial buildings in Greater Hartford. 8.5% The industrial sector's vacancy rate at the end of the second quarter of 2017. 588,105 The square footage that has been absorbed by Hartford area industrial tenants during the first half of 2017. S O U R C E : C B R E / N E W E N G L A N D (Clockwise from left) Landlord Griffin Industrial Realty has drawn tenants to its 137,000-square-foot building opening this fall in Windsor; steel framing for William B. Meyer's 75,000-square-foot addition to its existing docu- ments-furnishings storage facility in Windsor. P H O T O S | C O N T R I B U T E D

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