Newton, Mass.-based Northland Investment Corp. bought the Goodwin Square Hotel & Office Tower in Hartford from New Goodwin Square LLC, an entity controlled by Boston-based AEW Capital Management, earlier this year. Experts are predicting more growth for the Greater Hartford office market in 2006.

Slow, steady absorption kept Greater Hartford’s office market more in league with the tortoise than with the hare, but commercial brokers say they are happy with activity in the first three quarters of 2005 and are confident the growth will continue through next year.

Experts at CB Richard Ellis in Hartford predicted in January that the market would absorb about 250,000 square feet in 2005, and so far their prediction is on track. As of the end of the third quarter, Greater Hartford saw absorption of 177,973 square feet, according to the firm’s statistics. By the end of the year, the market should meet or exceed expectations, according to John McCormick, a senior vice president and partner at CB Richard Ellis.

“That’s good, measured, positive absorption for us,” McCormick said.

In today’s market, absorption of 250,000 square feet is considered good, he added.

“It’s kind of slow and steady growth,” he said.

McCormick said the north market – which includes towns like Windsor, Bloomfield and East Granby – was the star of the third quarter and of much of the year, with 102,000 square feet absorbed at the close of the third quarter.

While leasing was steady, investment sales have been picking up, according to Jim Stanulis, vice president at Colliers Dow & Condon in Hartford. More people with money have been chasing fewer available properties, he said, and buyers are getting closer to paying a building’s replacement cost. Just a few years ago, investors were able to buy buildings for about 50 percent of their replacement costs, he said.

One major indicator of the growing investor interest in Greater Hartford was Newton, Mass.-based Northland Investment Corp.’s purchase in September of the Goodwin Square Hotel & Office Tower from New Goodwin Square LLC, an entity controlled by Boston-based AEW Capital Management.

McCormick said the investment market also saw many off-market deals in the first three quarters of 2005. Of about 20 buildings sold this year, seven were off-market.

The market’s leasing activity has been steady all year, according to Stanulis.

“It’s marching in place,” he said. Rental rates are going down a couple of percentage points, and there has been lots of leasing activity, but companies also have been evening out the activity by returning space to the market. The amount of leasing has been encouraging for brokers and landlords, however, he said.

“It’s just kind of more of the same,” Stanulis said.

The available space in Greater Hartford is spread out pretty evenly over the area, with a bit more concentrated in Hartford’s central business district. Stanulis said he expects the rest of the year to mirror the happenings of the first three quarters.

“A little bit more of the same the rest of this year,” he said.

Stanulis added that he expects the rest of the year to see some more positive absorption. Some big players have been looking at space in the market, he said.

Key Renewals

According to Colliers Dow & Condon’s numbers, which track 370 buildings in the area, the vacancy rate at the end of the third quarter was nearly 20 percent, with availability of nearly 11 percent. Colliers’ numbers do not reflect buildings under 10,000 square feet, buildings that are occupied by their owners or buildings owned or leased by the state.

Numbers from Cushman & Wakefield – which tracks slightly more space than Colliers – show overall vacancy down several percentage points from last year. The overall vacancy rate at the end of the third quarter of 2004 was about 21 percent, while the overall vacancy rate at the end of the third quarter of 2005 was about 18 percent.

Absorption in the north office market fueled the third quarter’s positive numbers. According to CB Richard Ellis, the 102,000 square feet absorbed there represented a 200 percent increase from last’s quarter’s absorption of negative 76,000 square feet. The vacancy rates there decreased from 23.5 percent to 18.8 percent.

Key renewals in the north helped those numbers take shape, according to McCormick. VantisLife leased 30,000 square feet at 200 Day Hill Road in Windsor, while Murdock Claim leased 12,800 square feet at 100 Northfield Drive, also in Windsor. The U.S. Postal Service also renewed space in the north submarket, and The Hartford relocated there and took additional space.

The east did not see that kind of positive absorption, with two large blocks of space coming back to the market. In Glastonbury, 27,000 square feet of space at 47 Eastern Blvd. was added to the market, and 20,000 square feet at 333 East River Drive in East Hartford also was brought to market. But there were several leases completed in the third quarter and vacancy levels there have decreased 50 basis points from 12.5 percent to 12 percent.

The office market in the south saw 7,700 square feet of positive absorption and vacancy levels decreased 40 basis points from 15.1 percent to 14.7 percent. Several transactions are expected to be completed in the fourth quarter.

The west also saw positive absorption. The area experienced 30,100 square feet of positive absorption, with Farmington seeing the most leasing activity.

Downtown Hartford’s activity was only eclipsed by the north. Overall, 53,501 square feet were absorbed and vacancy levels decreased 70 basis points from 24.3 percent to 23.6 percent. Notable transactions downtown were 38 LLC’s purchase of the 32,000-square-foot 38 Prospect St., which will be 100 percent leased to Jeter Cook & Jepson. International law firm Robinson & Cole signed a long-term lease for an additional 17,000 square feet at 280 Trumbull St.

Overall, the Greater Hartford market is not attracting large labor, but is seeing lots of diversification in its employment base, McCormick said. Mortgage companies were a major player in the first three quarters of 2005. Twelve new mortgage offices accounted for about 80,000 square feet, a good share of the positive absorption.