January 11, 2019

CBRE: Industrial still Hartford region's realty pacesetter

PHOTO | Contributed
PHOTO | Contributed
Amazon's distribution center in Windsor.
PHOTO | Contributed
FedEx Ground's distribution-hub facility in Middletown.

Industrial-property sales and leasing again paced Greater Hartford's commercial realty market last year, and no let up is likely this year, commercial broker-advisor CBRE-New England says.

CBRE industrial-sales broker Kyle Roberts told an audience Friday at CBRE's annual 2019 Greater Hartford real estate outlook breakfast-forum at the Hartford Marriott Downtown that a net 1.2 million square feet of industrial space was absorbed last year.

Mirroring recent years, the net effect, Roberts said, was that industrial-space vacancies for the Hartford region fell more than 7 percentage points, while net rents rose 5.5 percent. E-commerce giant Amazon, FedEx, grocer Trader Joe's led a roster of blue-chip tenants who debuted or expanded their regional facilities in 2018, he said.

The optimism landlords and tenants are showing in Greater Hartford industrial properties is attracting not just out-of-state investors from New York, Massachusetts and neighboring states, but foreign investors as well.

It also has led, Roberts said, an Indiana developer-landlord to build in Cromwell the biggest "speculative'' industrial-space development in Greater Hartford's history -- an approximately 403,000 square-foot, state-of-the-art manufacturing-distribution facility at 120 County Line Road.

However, office-space demand in the region remains tepid, with that sector undergoing negative absorption last year, according to CBRE Executive Vice President/Senior Broker John McCormick.

Virtus Investment Partners pending headquarters relocation from 100 Pearl St. to the Gold Building one block away and Infosys' Goodwin Square lease were the biggest downtown office leases last year, McCormick said.

This year, downtown Hartford will continue to see, McCormick said, landlords reinvest in properties, particularly through sizable space-improvement incentives offered to attract or retain tenants. The city's ambitions for redeveloping its Downtown North quadrant adjacent to the ballpark also could be a spark, he said.

Hartford also is home to 10 "opportunity zones,'' specific city neighborhoods tagged to qualify for tax-subsidized investments, McCormick said.

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