Hartford's iconic "Stilts Building" went into foreclosure in 2022, in part, to the region's troubled office market. Photo courtesy of the city of Hartford

Hartford ranks dead last among 80 North American metros in commercial real estate prospects for 2023, according to a report that tracks shifting investment patterns for the various property types.

The Urban Land Institute and PwC “Emerging Trends in Real Estate” report ranked the metros’ prospects based upon interviews and surveys with more than 1,400 commercial real estate executives.

The report tracks a shift toward Sunbelt metros as a favored landing spot for commercial real estate investors in the pandemic era. Fourteen of the top 15 markets ranked for 2023 prospects are located outside of the Northeast. Nashville, Dallas/Fort Worth and Atlanta comprised the top three markets.

Hartford ranked 79th out of 80 metros in investor demand, development and redevelopment opportunities, availability of debt and equity, and homebuilding prospects.

The report groups Hartford with seven other metros in its “reinventing” category along with Buffalo, Cincinnati, Milwaukee, Cleveland, Providence, Detroit and St. Louis.

The report characterizes 2023 as a transitional year for commercial real estate prospects across North America, as rising interest rates and declining economic prospects depress real estate investment.

The for-sale and rental housing market is already cooling on a national scale, and the once-white-hot industrial warehouse market is unlikely to maintain its recent growth, the report states.

The prospects for office properties hinges upon the duration of hybrid workplace policies and their effect on future demand.

“Probably somewhere between 10 and 20 percent of the stock needs to be repurposed, leaving the 80 percent that really does a better job of delivering what tenants want,” one executive told the report’s researchers. An affordable housing developer expressed hope that some office buildings can be turned into residential buildings, including some homeless shelters.

“It’s all going to be triggered by when major leases roll or debt matures or there’s some debt extension test that comes up,” an investment banking executive told researchers. “Some of those buildings will come back to the lenders, but others may be candidates for conversion to other uses.”

Boston’s commercial real estate is the most resilient market among the four “innovation clusters” including New York, San Francisco and Washington, D.C., and ranked eighth overall.

“Boston has leveraged its region’s world-class concentration of higher education to become a world leader in life sciences,” the report stated.