January 12, 2018

CBRE: Area industrial realty still a pacesetter

City Place I in Hartford, the taller of the two buildings pictured.

Industrial-space demand will remain strong for Greater Hartford this year but downtown office and suburban space will continue facing headwinds until sustained job growth resumes, commercial broker CBRE New England says.

The global commercial-investment real estate brokerage and advisor with a major Hartford presence shared its 2018 forecast for central Connecticut real estate Friday at its annual Hartford Market Overview briefing at the Hartford Marriott Downtown.

According to CBRE market specialists, grocer Trader Joe's and other high-volume retailers, including a major online retailer that CBRE says it cannot name because they have client-broker relationship, have built to lease or are building huge distribution facilities to accommodate their "last-mile'' and same-day delivery ambitions. Trader Joe's is erecting a 750,000-square-foot distribution facility in Windsor.

Also, Amazon.com is underway with an 800,000-square-foot fulfillment facility on the former Pratt & Whitney plant site in North Haven.

The Hartford region's industrial market ended 2017 with an 8.8 percent vacancy rate and positive net absorption of 757,958 square feet, CBRE data shows. Asked rents during the year averaged $5.15 per square foot.

Meantime, downtown Hartford's 2017 vacancy rate was 17.2 percent, despite the continued conversion of older office space into apartments, CBRE data shows. Rents for Class A space averaged $20.95.

UnitedHealthcare in CityPlace I and Nassau Re, parent of Phoenix Life Insurance, in One American Row, better known as the "Boat Building,'' were among tenants who ceded space back to their landlords last year, CBRE said.

The suburban Hartford's office market had a 17.9 percent vacancy rate last year, with rents averaging $20.04.

The rise of suburban medical offices will be a continuing bright spot for that realty sector, CBRE specialists said. In retail, the opening of urgent-care clinics and online retailers eager for "last-mile'' consumer-delivery outpost will help offset some retail space being abandoned by department stores and specialty retailers.

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