Commercial Record readers’ opinions are split when it comes to whether new office space, mixed-use, laboratory or industrial construction is likely in 2013, according to a recent survey.
More than 30 percent of all readers said high-rise office space projects are somewhat unlikely to be built this year, but then again, more than 22 percent couldn’t decide if it is likely or not.
Similarly split decisions were handed down from bankers and commercial brokers for all asset types in a December Commercial Record reader survey, conducted in conjunction with Massachusetts-based Bannon & Co.
However, Jeffrey Livingston, managing director for CB Richard Ellis in Hartford, comes down on the negative side for new office construction.
“In 2013 we will see [owner occupiers] continue to drive the market, as opposed to developers building new buildings. I don’t see that happening in 2013.”
But there was one asset class that Connecticut real estate professionals seemed in some agreement over, and that’s the apartment building, the property class investors have flocked to in recent years. More than 48 percent of survey participants agreed debt will be available on good terms for multifamily apartment projects this year. As an investment sales decision, apartment buildings will likely be the most popular asset class, given that more than 50 percent of respondents said multifamily properties will be even more popular this year than last year.
On the leasing front, 66 percent of readers said leasing velocity will at least match last year, while just 6 percent said leasing will outpace 2012. Larry Levere, director of office brokerage for Sentry Commercial in Hartford, said the Hartford County office market has already felt a tightening as vacancies have been erased, especially after the Connecticut Regional Education Council purchased two vacant properties totaling about 265,000 square feet last year.
Speaking of office activity, the state of Connecticut has agreed to buy the 556,000-square-foot Connecticut River Plaza office complex, and it’s rumored the firm could also purchase 55 Farmington Ave. from The Hartford. If that happens, the state would move thousands of workers to downtown Hartford, leaving significant space vacant in the suburbs, possibly more than 100,000 square feet, Levere said.
‘Business As Usual’
For the capital markets part of the equation, it should be “business as usual” for Hartford, with debt available to well-heeled investors, especially for properties with good credit tenant, said Chris Ostop, executive vice president with Jones Lang LaSalle. Last year was an active one for investment sales activity in Hartford County, and Ostop expects that to continue in 2013.
“[Lenders] are lending,” Ostop said. “For cash-flowing assets, Hartford is open for business. As properties progress in their natural life cycles, there will be no barriers to sale for owners.”
The biggest property currently on the market for sale is downtown Hartford’s Metro Center, the 12-story, 294,000-square-foot tower on Church Street.
“I expect more landlords will be more apt to try to test the waters than not with no external barriers,” Ostop said. “If [a property is] at 84 percent occupancy and the owner’s been waiting for a little more, they could try the market anyway without having the debt markets affect the purchase price. There’s some pent-up demand from sellers that wanted sell a few years ago, but held on to stabilize the property or got an extension on their current debt. I would expect them to try again.”
To see the results from the 2012 reader survey, click here.
Email: jcronin@thewarrengroup.com
