The $65 million sale of Hartford’s 280 Trumbull St. in late July was the city’s second-largest downtown office building deal in 15 years, according to CB Richard Ellis. Investment sales in Greater Hartford were brisk during this year’s third quarter.
Investment sales and industrial leasing and buying in Greater Hartford bustled during the third quarter of this year, while office activity continued on its steady course.
“The year continues to be fairly flat,” said Jeff Livingston, managing partner at CB Richard Ellis’ Hartford office.
The focus of the area’s office market has been on renewal and retention, Livingston said. Landlords have been doing a good job of keeping their current tenants. There is positive momentum in the office market, which is apparent when tenants – especially large, corporate tenants – aggressively renegotiate their leases, Livingston said. But not much office space changed hands during the third quarter, he said.
“There’s not too much moving around,” Livingston said.
Commercial brokers in Hartford are noticing a little more activity lately because of the country’s improved economy, according to Nick Morizio, president of Colliers Dow & Condon in Hartford.
The vacancy rate for office space in Greater Hartford in the third quarter of this year was up slightly from the vacancy rate in the third quarter of 2003, according to statistics from Cushman & Wakefield. The vacancy rate for office space this year was 20.6 percent. Last year’s third quarter vacancy rate was 19.5 percent.
Some areas in the region, however, saw improvement. The vacancy rate in the eastern section of Hartford County dropped more than 4 percentage points, from 19.8 percent in the third quarter of 2003 to 15.2 percent in this year’s third quarter, according to Cushman & Wakefield’s numbers. Those numbers reflect activity going on in places such as newly constructed 455 Winding Brook Drive in Glastonbury. Several companies, including GEI Consultants, which leased 13,000 square feet there, have signed leases at that address, Livingston said.
But Greater Hartford is not a growth area like the Sun Belt, Morizio said.
“We don’t change a lot,” he said.
Some manufacturing companies have been growing, however, which accounts for some increasing industrial activity, Morizio said.
“What’s growing is the smaller companies,” he said.
People in need of manufacturing space or warehouses have been out kicking tires in the third quarter and since, Morizio said. Many want to find additional space before interest rates go up, he said.
Tim D’Addabbo of Cushman & Wakefield’s Hartford office has noticed a similar trend. People in manufacturing and warehousing have been looking for new space for the last 18 months, he said, but there hasn’t been a huge change in demand.
“It’s essentially been the same as it’s been for the last 15 years,” D’Addabbo said.
‘Fairly Spread Out’
The vacancy rate for manufacturing space dropped several percentage points from the third quarter of 2003, according to statistics from Cushman & Wakefield. The vacancy rate for Hartford County for the third quarter of this year was 14.4 percent, down from last year’s third quarter vacancy rate of 17.6 percent. The vacancy rate in northern Hartford County, which includes Windsor, Bloomfield, East Granby, Windsor Locks, Suffield and Enfield, has been particularly low for the past couple of years. The vacancy rate in the third quarter of this year was 6.9 percent, up from 6.6 percent during the third quarter of last year.
The vacancy rate for warehouses also dropped in the third quarter. The overall vacancy rate for warehouses/distribution centers dropped more than 4 percentage points, from 14.3 percent in the third quarter of 2003 to 9.7 percent in the third quarter of this year, according to statistics from Cushman & Wakefield.
The vacancy rate for overall industrial space was down significantly in the third quarter of this year. The vacancy rate was 12.6 percent, compared with 16.6 percent in the third quarter of last year, according to Cushman & Wakefield’s statistics.
Many business owners have been looking for land for new construction over the past 18 months, D’Addabbo said. The lack of quality existing manufacturing space and warehouses has led many national corporations, such as Ford Motor Co., to construct new buildings. The existing space currently on the market is mostly Class B warehouse space or older manufacturing space that investors bought for a discount and lease as-is, he said. But national users often want higher ceilings and other amenities not offered by existing space. And low interest rates and reasonable costs of construction have made the present a popular time to build, he said.
The industrial activity has been all over Hartford County, D’Addabbo said.
“It’s fairly spread out,” he said.
The industrial market likely will stay fairly stable, D’Addabbo said. Hartford County has experienced the same, stable atmosphere for the past 12 years, he said.
Morizio agreed. Brokers hope the industrial market will stay positive, but buyers are being cautious on where they spend their money because of uncertainties about the economy, he said.
Although demand for industrial and office space stayed fairly stable, increasing interest in central Connecticut made for some multimillion-dollar office building sales in the Hartford area.
“It’s been a very strong continuing quarter for investment sales,” Livingston said.
The New Boston Fund in late July sold a 29-story, Class A office building in downtown Hartford for $65 million. It was the second-largest office building sale in downtown Hartford in 15 years, according to CB Richard Ellis, which represented the seller.
The New Boston Fund sold the 672,000-square-foot building at 280 Trumbull St. to New York-based Grunberg Realty, which was represented by Colliers Dow & Condon.
The building first went on the market last November, John McCormick, one of the CB Richard Ellis brokers who represented New Boston Fund, said in August. McCormick and his partner, Pat Mulready, began to aggressively market the building in the beginning of 2004.
“It’s a very large sale for Hartford,” said Jay Wamester of Colliers Dow & Condon shortly after the deal.
Grunberg was one of five bidders for the building. Most of the company’s property is in New York City, but Grunberg officials wanted to expand their portfolio, Wamester said. The deal they got on 280 Trumbull St. was better than any they could have found in Manhattan, he said. At the time of sale, the building was 93 percent occupied and housed tenants such as Prudential Financial, Robinson & Cole, CIGNA Corp., UPS Capital and the U.S. National Labor Relations Board, according to CB Richard Ellis.
Investment sales likely will continue to be strong in the coming months, Livingston said. The leasing market will track that, he said, and Greater Hartford will likely see ongoing renewals.
“I think the leasing markets will remain tenants’ markets,” he said.
