The office tower at 100 Pearl St. in downtown Hartford is believed to be one of the properties that could benefit from the city’s revitalization efforts in 2005.

Strong investment sales – which have bolstered Connecticut’s commercial real estate market over the past year – should continue into 2005, according to several local real estate professionals. The coming year also should see Stamford continue to shake off the recent slowness of its office market and the realization of some of Hartford’s ongoing revitalization efforts.

Low interest rates over the past year kept investment sales strong, said Steve Miller, owner of Woodbridge-based Levey Miller Maretz. Interest rates are expected to rise over the next year, but as long as they stay reasonable, investment sales should continue, Miller said. Investors are looking at real estate as a good, stable investment, he said.

The investment firm New Boston Fund plans to acquire more buildings throughout the state in 2005, according to its Vice President of Asset Management Bill Fenn. The firm owns 1.87 million square feet of property in Connecticut: eight properties in Greater Hartford and a six-building corporate park in Trumbull. In 2004, New Boston Fund sold almost $100 million in assets in Connecticut. The company sold four Class A office buildings in Greater Hartford, one Class B office building in Rocky Hill and 4.5 acres of land in Trumbull. The sales were a reflection of the strong interest in real estate in 2004, Fenn said. Many of New Boston Fund’s buyers were from out of state, he said.

The firm hopes to increase its assets this year.

“We are looking forward to developing and acquiring new assets statewide,” Fenn said.

New Boston Fund, which has properties in 12 states, mostly along the East Coast, has $75 million to $100 million earmarked for acquisitions in 2005, according to Fenn. In Connecticut, the firm will look for existing office space or warehouse distribution centers to buy over the next year, Fenn said.

‘Pockets of Interest’

As investment sales stay strong throughout the state, it is believed that Stamford and the rest of Fairfield County should continue on the bright streak that was established late in 2004.

“Overall, the Fairfield market as a whole is positioned to shake off the slowness of the last few quarters,” said Tom O’Leary, senior director at Cushman & Wakefield’s Stamford office.

Stamford has struggled over the past year despite amenities like 45-minute train rides into New York City and its reputation as a business hub in Connecticut. But Class A office vacancy rates increased in the third quarter of 2004 to 15.8 percent from 14.8 percent in the second quarter, according to statistics from Albert B. Ashforth Inc.

Lower Fairfield County long has been plagued by high housing costs that push workers farther east – often to be followed later by the companies that employ them – and by gridlock on Interstate 95, the main artery between New England and New York City. “One thing that hurts us is the transportation,” said Gerard Hallock, senior vice president at Ashforth, in October.

But the overall vacancy rate in Fairfield County has gone down since 2003, O’Leary said. The third-quarter vacancy rate for 2003 was 18.9 percent and the vacancy rate in the third quarter of 2004 was 18.1 percent, he said. The commercial market in the county follows Stamford’s market, he said, and the overall vacancy rate there has fallen since the third quarter of 2003, when it was 18.6 [percent]. In the third quarter of 2004, it stood at 16 percent, O’Leary said.

“I think that bodes well,” he said.

Norwalk’s vacancy rate is also improving, he said. It was 22.4 percent in 2003 and is now 19.9 percent, O’Leary said.

“There, again, the vacancies come down,” he said.

Retail also is doing well in Fairfield County, O’Leary said. There are new stores like Target and Burlington Coat Factory in Stamford and, although a Filenes location there closed, its owner is doing extensive renovations to Filenes’ sister store, Lord & Taylor.

There are “pockets of interest” in Stamford and other parts of the county, O’Leary said, and 2005 likely will see commitment for new construction in the county. Rents in Stamford probably will increase, he said.

“I think Fairfield County should continue to see absorption of space,” O’Leary said.

The coming year could also see the state’s capital living up to its self-appointed nickname of “New England’s Rising Star” as construction crews in 2005 wrap up some of the state- and privately funded projects that officials hope will lead to Hartford’s downtown revitalization.

The city, the state and private developers have undertaken projects aimed to make downtown Hartford a 24-hour destination. The city’s downtown has long been a center for business, but the exodus that takes place when offices close down takes most of the feet off the street before dinnertime.

“Until people come and live downtown, it’ll remain that way,” Fenn said.

Next year should see the completion of the Connecticut Convention Center and its accompanying hotel, two apartment buildings and some parking projects. The convention center and the Hartford Marriott Hotel, located on the eastern side of the downtown in the mixed-use development known as Adriaen’s Landing, are scheduled to open in July, according to the Capital City Economic Development Authority, the state agency that oversees many of the projects. The apartments at the mixed-use development Trumbull on the Park also are scheduled to open late in 2005.

Several other apartment complexes – including a tower in the central downtown development Hartford 21 – are in the works. Once some apartments open and people start living downtown, the office sector and the rest of the commercial real estate market will be affected, according to real estate professionals.

With the completion of some of those projects, real estate investors and businesses will realize that, with the kind of capital investment going on in Hartford, the city will actually change, Fenn said. It should have a positive effect on the office market, he said.

“When there are more people and more amenities downtown [it makes the city more attractive to businesses],” Fenn noted.

Fenn added that he hopes to see an effect on New Boston Fund’s signature Connecticut property, an office tower at 100 Pearl St. in downtown Hartford. More activity downtown could mean increased occupancy there and at all other downtown office buildings, he said.

Miller agreed.

“I think Hartford’s going in a good direction,” he said.

The new housing also will spur the need for new restaurants and stores, he said. Although some of the projects will be done in 2005, it might take longer before they drive up rent and sales prices in the area.

“We’re looking forward to a great year next year,” Miller said.