With demand for Hartford office space showing little sign of recovery from its pandemic-induced blues, area business leaders and municipal officials are putting their heads together to figure out what to do.
According to the Hartford Business Journal, local officials are pushing hard to find ways to encourage even more housing conversions of under-performing office towers, but industry leaders are skeptical.
The Hartford-area office market is definitively stuck in the doldrums. Second-quarter data from commercial brokerage JLL, the most recent available, paints a stagnating picture as major area employers prepare to permanently slash their office requirements.
Year to date, the market has seen over 250,000 square feet of negative absorption, largely concentrated in suburban markets, with nearly 700,000 square feet of sublease space available in a 24 million-square-foot regional market.
The 7.4 million-square-foot Hartford CBD itself has a total vacancy rate of 18.9 percent, compared to the 20.9 percent rate in the area’s suburbs. Among the Hartford region’s 13.1 million square feet of class B properties, the picture is more grim: 20.5 percent vacancy in the downtown core, and 21.1 percent in the suburbs.
This softness is leaving landlords to up concessions, like major downtown landlord Shelbourne Global offering tenants who lease more than 5,000 square feet at least two months’ free rent, plus tickets to sporting events and concerts, JLL said. Shelbourne has also seen one if its major holdings downtown, the iconic “Stilts Building” fall into foreclosure in part thanks to low tenant demand.
In response, city officials are looking to find ways to cut the area’s high property tax rates, which both deter investment downtown and make it difficult for commercial property owners to operate their buildings.