Market Sales and Leases - 6/09

The market continues to meander. Lease renewals continue to dominate the market while new transactions lag far behind. That said, there is a sense that we are headed back! September and October will likely tell us a lot about what is to come in 2010!

Click link here for the June 2009 Market Sales and Leases Report: June 2009 Market Transactions.pdf

Keep Smiling!

Keep Smiling!

West:

The vacancy rate for office space in the western suburbs relatively unchanged for 2006 at 12.6% (based on 5.7 million total square feet of space). West Hartford still the tightest of all the suburban markets with a 6.4% vacancy rate- 60,000 sf of new office space at Blue Back Square will be delivered by the end of 2007 but 70% of that is already committed (Cummings & Lockwood is the first announced tenant for 11,000 square feet.) Edens & Avante purchased 2523 & 2551 Albany Avenue (West Hartford) in mid-2006 and are likely to announce plans to renovate or redevelop some or all of their Bishop's Corner properties sometime in 2007. Two other significant sales in the western market during 2006 were UTC's purchase of 4 Farm Springs, Farmington for $13.5 million ($118 per square foot), and the sale and leaseback of the Stanley Works Corporate Headquarters in New Britain for $23 million. St. Paul Travelers has recently put 30 Batterson Park Road on the market for sale with an asking price of $10.5 million, or $l38 per square foot.

Avon currently has the highest vacancy rate for office space in the west (21.8% based on about 800,000 total square feet), with Simsbury (18.6%) a close second. The Farmington market (also among the tightest of the suburban markets) remains healthy with a vacancy rate of 10.1%.

Asking rental rates for office space in west generally range from $17.50-30.00 per square foot on a full service basis, depending on the quality and location of the building.

South & East:

The vacancy rate for office space in the southeast suburbs decreased slightly during 2006 from 13% to 12.1%. Rocky Hill (10.6%), Glastonbury (11.4%), and East Hartford (12.3%) have all tightened up over the course of 2006, and 20,000 square feet of vacant office space on one floor in an existing building is increasingly difficult to find in this sector of the market. Significant office sales in the southeast suburbs during 2006 include 99 Founders Plaza, East Hartford for $20 million ($135 per square foot), 628 Hebron Avenue (Glastonbury Corporate Center) for $19.65 million ($122 per square foot), 455 Winding Brook Drive, Glastonbury for $14.35 million ($160 per square foot). 500 Enterprise Drive and 400 Capital Boulevard (two of the larger buildings in Corporate Ridge, Rocky Hill) are currently on the market for sale and are likely to sell some time during the first half of 2007. The office portion of the first phase of the speculative new development at 124 Hebron Avenue in Glastonbury was completed (and fully leased) as of the end of 2006. The next phase of construction, which includes an additional 27,500 square feet of office space, has commenced and should be complete by the end of 2007.

Also under construction, the new 65,000 square foot $23 million recording studio and broadcast facility for WFSB should be completed by late in 2007.

Asking rental rates for office space in the southeast generally range from $15.00-24.50 per square foot, on a full service basis, depending on the quality and location of the building.

North:

The northern office market currently (and traditionally) has the highest vacancy rate for office space in suburban Hartford. 38.6% at year-end 2006 compared to 26.4% at year-end 2005 based on a total market of 4 million square feet. The major source of that increase in vacancy in the northern market is the addition of the South Building on the CIGNA campus in Bloomfield. CIGNA is in the process of consolidating into the Wilde Building (also on the CIGNA campus), thus freeing up and adding 565,000 vacant square feet to the market.

Significant office sales in the northern suburbs during 2006 include 175 Addison Road in Windsor for $64 million ($109 per square foot), 4,6 & 8 Griffin Road North and 1&2 Waterside Crossing in Windsor for $30.25 million ($80 per square foot) and 1599 King Street in Enfield for $7.8 million ($69.00 psf). 80 Lamberton Road in Windsor is currently on the market for sale, and it is likely to sell during the first half of 2007. Rental rates in the northern market generally range from $15.00-18.50 per square foot on a full service basis.

The availability of affordable land in Windsor continues to attract large users to that market. The new 475,000 square foot ING building on Northfield Drive in Windsor should be complete by late 2007, and in December, The Hartford announced it will spend $146 million on a new 450,000-square-foot office building in Windsor for its fast-growing life insurance and wealth management business.

Downtown Hartford:

The vacancy rate for Class A office space in downtown Hartford rose modestly from 13.51% to 14.02% during 2006, despite a 300,000 square foot lease by Travelers at State House Square (210,000 square feet) and the Gold Building (90,000 square feet). Some of the other larger moving pieces appear to be falling in to place, as Lincoln National Life Insurance has renewed its lease for 190,000 square feet at 350 Church Street, and Prudential appears to be headed for a 275,000 square foot lease renewal at 280 Trumbull Street. Rumors abound regarding the 300,000+ square feet that MetLife occupies in CityPlace, but no official announcements have been made. Asking rates for Class A office space range from $19.50-25.00 per square foot.

Although no Class A buildings were sold during 2006, 100 Pearl Street, State House Square and The Gold Building are all likely to change owners sometime during 2007. Additionally, three Class B office buildings located at 140 Garden Street ($7 million), 777 Main Street ($13 million) and 20 Church Street ($19 million) were all purchased by investors who will significantly renovate/reposition these buildings in the market.

Residential developments including Hartford 21, The Metropolitan, the South Armory building at Coltsville were completed during 2006, while progress continues at Sage-Allen (nearly complete), 1 American Plaza (2/3 complete) and Front Street (excavation work underway). Also under construction, but not slated for completion until 2008 is the Connecticut Center for Science & Exploration.

Industrial, Q4 2006......................Connecticut and Western Massachusetts industrial markets remain active...General concern for next year (what else is new!!!) but for the time being most brokerage firms remain very active...Vacancy rates generally peak in the low teens...Most vacancies in the single to low double digit range...Continued leasing activity in the larger building sector markets (New Breed, North Haven CT...Tempur-pedic, Clinton CT...Federated Stores, Cheshire CT...C&S, East Windsor CT...Vaupell Industrial, Agawam MA) as well as the design build and build to suit market...Sales activity in larger buildings remains strong (cash flow still sells!) although investors becoming more conservative on future rent increase projections...Speculative construction remains active in CT (Griffin Land in Bradley Airport region and Winstanley Enterprises in Rocky Hill CT region) and keeps inventory fresh in these markets...however woefully low and stale in Western Mass...Continued softness in the mid market range in CT...30,000 - 50,000 sf...Can't quite explain that one!! But small market (10,000 - 30,000 sf) still healthy...Both markets generally healthy in MA...much of this due to the lack of inventory...Concerns about increasing inventory...mostly in the "corporate owned" sector...Lego (Enfield), Mustad (Bloomfield), Big Lots (Pittsfield), Reflexite (Avon), Hitchcock (New Hartford) etc...The "crystal ball"??? We are looking for continued overall strength in the markets throughout 2006 and well into 2007 (first 2 quarters anyway)...from there...well, we'll give you those predictions in the next couple of reports...when the crystal ball gets a little clearer!!! : )

Keep smiling!