The Travelers Indemnity Co. signed a lease expansion in August for a total of 391,000 square feet at State House Square – the largest lease transaction in Hartford’s central business district in 10 years.

Several big deals in downtown Hartford, the death knell of a plan that would have brought a movie studio and theme park to southeastern Connecticut, and stability in Fairfield County all marked the state’s commercial real estate market in 2006.

Hartford’s suburbs also are experiencing a lack of large available space, and it is becoming more common to see companies building new warehouses.

“Probably the biggest thing is that people are looking for space and there’s not a lot of large space available,” said Nick Morizio of Colliers Dow & Condon in Hartford. “It’s hard to find really large blocks of space anywhere.”

Most available space in the northern suburbs consists of Class B and C space, and older industrial buildings, Morizio said.

Downtown Hartford’s commercial market continued on a healthy streak. In the third quarter of the year, several big companies decided to stay in or move to the city.

Aetna Inc. in late July announced it will make a capital investment of about $219 million to improve its Hartford campus over the next several years, and that it will consolidate most of its Middletown-based employees into the Rogers and Tower buildings in the city.

That announcement was followed by news in August that The Travelers Indemnity Co. had signed a lease expansion for a total of 391,000 square feet at State House Square – the largest lease transaction in Hartford’s central business district in 10 years.

“Any time you absorb space in this market, it’s like manna from heaven,” said Jim Stanulis, principal at Colliers Dow & Condon in Hartford, in a subsequent interview. “We’re encouraged by it.”

The market showed steady improvement over the several quarters preceding the announcements, according to Colliers Dow & Condon. Vacancy rates in the central business steadily dropped over the first six months of this year, going from 20.62 percent in 2005 to 19.78 percent in the first quarter of 2006, and dropping further to 16.56 percent at the end of the second quarter.

The market had not seen announcements of that magnitude for some time, Stanulis said. Hartford’s office market has had bad luck and bad press. With the city’s revitalization, and with the vision of more feet on the street starting to become a reality, now is Hartford’s “time to shine,” Stanulis noted.

“It’s a message we continue to send,” he said.

The Travelers deal lowered the Class A vacancy rate in the CBD to 13.2 percent from 18.6 percent, according to CB Richard Ellis.

Also in September, St. Paul Travelers recommitted to the city with a new 87,220-square-foot lease at One Financial Plaza.

“[The lease] dropped the vacancy rate significantly,” said Andrew Fuller of CB Richard Ellis in September. “I think this is an important deal for Hartford.”

St. Paul Travelers is based in St. Paul, Minn., but the company is the result of a 2004 merger between St. Paul Cos. and Travelers Property Casualty, which was based in Hartford.

The building’s owners characterized the transaction as one of the most important with which they have been involved, Fuller said. The lease went a long way toward stabilizing One Financial Plaza, leaving it almost 100 percent occupied. St. Paul Travelers’ offices take up the fifth to the eighth floors, which had been vacant since Talcott bought the building in 2000.

There’s no Utopia

A Massachusetts development company well-known for its projects in Hartford this year expressed interest in another high-profile site: the former Norwich Hospital, which had been eyed by a developer who wanted to build a movie studio and theme park.

Newton, Mass.-based Northland Investment Corp., which has developed some of the key pieces of downtown Hartford’s revitalization, sent a letter last month to the Board of Selectmen in Preston, the town that contains most of the site, according to company spokesman Chuck Coursey.

“We said, ‘Look, it’s something we’re very interested in,'” he said in November.

Coursey said the company sent the letter before the Preston Board of Selectmen terminated an agreement with New York-based Utopia Studios on Nov. 22. According to the Associated Press, Preston officials said Utopia failed to meet numerous deadlines, particularly for a payment of more than $56 million.

Utopia has expressed interest in continuing to work with the town, but the outcome hasn’t yet been determined.

In Fairfield County, the commercial market, which has been in good overall health for the past few years, continued on that path.

Fairfield County’s market in the third quarter of this year was characterized by overall stability, drops in vacancy rates and firming of prices.

“I think landlords are feeling pretty bullish about the market,” said Belinda Scanlon, senior vice president at Albert B. Ashforth Inc. in Stamford, in an October interview.

According to Albert B. Ashforth’s statistics, the vacancy rate for Class A buildings in Fairfield County dropped to 14.6 percent from 16.4 percent in the second quarter. There was almost 5 million square feet of Class A space available at the end of the third quarter, versus nearly 5.6 million square feet at the end of the previous quarter.

At the end of the third quarter in 2005, the vacancy rate was 17 percent and there were more than 5.8 million square feet available.

The decreasing vacancy rate and firming prices were due to the lack of new commercial construction in the area, coupled with some companies coming to Fairfield County from New York or other areas, according to Scanlon.

Royal Bank of Scotland and RBS Greenwich Capital’s new construction in Stamford, where the companies announced last year they would develop 450,000 square feet of space, was the only building activity that took place.