Stamford-based developer Building and Land Technology is repositioning 1 Elmcroft Road in its Harbor Point complex as “Silicon Harbor,” and hoping to attract tech tenants to the former Pitney Bowes corporate headquarters.
It’s an increasingly familiar quandary in Connecticut commercial real estate circles: how to revive massive office complexes built during the heyday of the suburban migration that are lagging in demand as 21st-century workspaces?
General Electric’s 526,000-square-foot Fairfield headquarters is the latest major office block soon to be emptied as the industrial conglomerate departs for Boston this year. In Simsbury, a New Jersey developer recently acquired The Hartford’s 172-acre office campus with redevelopment plans in mind, as the insurer moves employees to other local offices. And in Stamford, Building and Land Technology (BLT) is marketing the former Pitney Bowes headquarters under the “Silicon Harbor” name as it contemplates a range of future uses for the 500,000-square-foot office building.
Ted Ferrarone, chief operating officer for Stamford-based BLT, said recent leasing activity confirms BLT’s strategy of creating the sort of lively 24/7 environment that is favored by younger workers and the employers that recruit them.
“It’s definitely real,” Ferrarone said. “Tenants are consolidating out of traditional suburban offices and they’re moving to in-fill mixed-use destinations. They’re putting a lot more people in the floor space than a traditional office and they’re using the amenities around the buildings.”
BLT hopes to build on the momentum from its surrounding Harbor Point complex overlooking Long Island Sound. The completion of 2,360 luxury apartments in nine buildings has generated foot traffic to support 30 shops and restaurants. And the five-building, 872,000-square-foot office component in the remainder of the complex hit 100 percent occupancy in late 2015 with the signing of several leases, including MC Credit Partners and Waypoint Residential. Hedge fund giant Bridgewater Assoc., after abandoning plans for an 850,000-square-foot headquarters on a nearby parcel, leased 137,000 square feet of temporary space at Harbor Point.
“It has the kind of caché that tenants today are really interested in,” said Michael Siegel, an executive managing director for Colliers International in Stamford. “They want to have a labor pool in place, which they have with the residential. They want social options which clearly there are with many restaurants and beer gardens. From a tenant demand perspective, they are going to do well.”
Financial companies dominate the high-end office space in Fairfield County, but vacancy rates have lingered near 20 percent since the recession. During 2015, office tenants leased 3.2 million square feet of space, but positive absorption totaled just 210,000 square feet, according to CBRE’s Marketview Snapshot. The availability rate was 19.9 percent at year’s end, just a shade below the 20.2 percent at the end of 2011.
For the former Pitney Bowes space, BLT is seeking a different industry demographic. By rebranding 1 Elmcroft Road as “Silicon Harbor,” it’s acknowledging the need to find tenant demand beyond the traditional money manager base.
The first step in the transformation took place in late fall, when BLT moved its own headquarters and 75 employees into the building. It’s exploring a multitenant leasing strategy. Along with office and tech incubator space, options include a hotel, residential units and college classrooms, Ferrarone said.
“We’re going to do a pretty comprehensive renovation,” he said. “For the first tenant that gets in here, we can customize a lot.”
Robert Caruso, a senior managing director for CBRE, said the mix of commercial and residential development at Harbor Point has finally reached a “critical mass.”
“You’re now at a point where it can support the retail,” Caruso said. “It was a little bit of a chicken-and-egg thing without a certain density of residences. Now with 2,000 new apartments, you’re getting more vibrancy down there.”
More Big Vacancies Looming
In Fairfield, the looming departure of its largest corporate presence has attracted interest from at least one developer. Less than a week after GE announced it would vacate its Easton Turnpike headquarters after four decades, Fairfield-based Kleben Properties announced that it is interested in redeveloping the property as a tech center with an “educational component.”
“Our goal is to provide for uplift to Fairfield in a major way with employment and great opportunities to hose with a technological background and that will radiate throughout the entire area,” Chairman Albert Kleban said in a statement. Kleban is the town’s second-largest taxpayer through its ownership of various office and retail properties, including the Brick Walk shopping center in downtown Fairfield.
CBRE is representing GE on its corporate real estate decisions. Caruso declined to comment on the company’s plans.
Filling the massive GE complex will be an uphill battle, Colliers’ Siegel predicted.
“Do (corporations) want to be in a remote location in a building that’s going to need significant infrastructure repositioning? I think it’s going to be a very tough assignment,” he said.
In Simsbury, town officials acknowledged the tepid demand for office space last year when they drew up a new mixed-use zoning including multifamily housing and retail space to encourage redevelopment of The Hartford’s office campus. In December, Short Hills, New Jersey-based developer Silverman Group acquired the 172-acre parcel and its 638,000-square-foot office complex for $8.5 million.
Email: sadams@thewarrengroup.com
