The state will buy two Harford office buildings -- one in downtown, one in Asylum Hill -- with space for thousands of state employees as it consolidates work sites to save money, sources familiar with the transaction said late Tuesday.
A formal announcement is expected Wednesday.
The state will buy Connecticut River Plaza on Columbus Boulevard for $34.5 million and the 12-story tower at 55 Farmington Ave. for $18 million, the sources said. The $52 million in financing for the purchases and other costs will need approval from the State Bond Commission.
The consolidation is expected to save the state more than $200 million in lease and renovation costs to other aging, state-owned buildings over the next 20 years. The estimated costs for moving expenses, buying furniture, and configuring the buildings for offices are expected to total $68 million.
It was unclear Tuesday how many state workers would be moved or what departments or locations would be affected. But the buildings -- totaling nearly 900,000 square feet -- can accommodate as many as 3,700 workers. A timeline for the move could not be determined Tuesday.
Gov. Dannel P. Malloy has made it a priority to streamline government, combining some departments, in the face of a swelling budget deficit.
Speculation about buying the buildings has swirled for months and has been discussed in open meetings, but the state has not publicly addressed the plan.
The relocation would be a boon to the downtown economy, boosting business for restaurants, shops and other attractions. It is estimated that spending by state employees and visitors to the agencies will pump $11 million into the local economy.
The two-tower Connecticut River Plaza has been vacant for nearly two years. It sold for $6.7 million in 2010, and the new owners -- FBE Limited and Cammeby's International -- invested nearly $10 million in renovations, including new elevators, heating and cooling systems and a new lobby. Its appraised value was $34.5 million to $36 million.
In Asylum Hill, the tower at 55 Farmington Ave., at Farmington Avenue and Flower Street, is owned by The Hartford Financial Services Group and has been on the market for about a year. The sale of the tower, built in 1990, is part of The Hartford's plans to whittle down its office holdings in Greater Hartford.
The tower was pegged at an appraised value of $20.1 million to $21.7 million.
Real estate brokers see the planned purchases as a boon to the downtown office market. The market for prime office space in downtown Hartford showed little improvement at the end of 2012, remaining stubbornly high at a 26 percent vacancy rate, little changed from a year earlier.
But with the purchase of Connecticut River Plaza, the vacancy rate would tumble to about 17 percent, by one recent estimate. That would bring the downtown Class A office market -- the most modern space with up-to-date amenities -- closer to a 12 percent vacancy rate that favors neither landlord nor tenant in negotiations. In turn, that can help push up sagging rental rates.
Although it couldn't be determined late Tuesday which offices would relocate, the 20-story building at 25 Sigourney St. is a prime candidate. In the past decade, the state has spent millions to try to fix water leaks and mold troubles, with mixed success. A portion of its crumbling parking garage was shut down last year.
The occupants of the Sigourney Street building include the departments of Revenue Services and Social Services.
Reprinted with permission of the Hartford Courant.
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