Brokers Closely Watching Broadcast House Redevelopment Project
CONNECTICUT PROPERTY LINE
By KENNETH R. GOSSELIN | The Hartford Courant
December 16, 2008
When Abul A. Islam revealed his plans earlier this month for redeveloping Broadcast House in downtown Hartford into a 12-story, $40 million office tower, he was faced with a very different economy than when he bought the property just five months earlier.
The stock market had tanked. Financing for commercial construction had tightened, and corporate layoff announcements nationally were coming almost daily.
Islam marched forward undeterred, however, and announced plans on a bitterly cold day at a press conference on Constitution Plaza.
Experts say he has his work cut out for him. He'll need to line up leases to get financing and will probably face hard questions from lenders.
"It's a tough time right now," said Bob Martino, a commercial real estate attorney at Updike, Kelly & Spellacy. "The economy is in a downward spiral, and that affects jobs and commercial real estate."
Islam has an innovative vision for a building that's seeking the highest "green" rating. He's also looking beyond the city's mainstay financial services industry for tenants, turning instead to technology and engineering firms.
Islam's firm, AI Engineers Inc., would be the first tenant, taking two floors and looking to move in by the end of 2010.
Real estate brokers are watching the project closely because it would be the first significant office construction project in downtown Hartford in 20 years.
"It's a challenge, but if he gets it done that will be a clear sign that Hartford is well on its way to a recovery," said Christopher Ostop, a commercial real estate broker at Jones Lange LaSalle in downtown Hartford.
In the two weeks since the Dec. 3 press conference, Islam has lost none of his enthusiasm. In fact, he says he has had preliminary discussions with banks on financing. Some potential tenants and contractors have also called, he says.
"Many people are feeling in a pessimistic way in the difficult economy," Islam said. "Some people may think this project cannot or will not happen. But I think it can."
Islam acknowledges that it won't be easy. In addition to leases — Martino says Islam will need 50 percent of the building committed to get financing — there is also the troubling trend of rising office vacancies in downtown Hartford.
Vacancies in prime, Class A office space downtown are expected to rise above 20 percent by the end of the year, compared with 15 percent a year earlier, according to commercial real estate services firm CB Richard Ellis.
CB Richard Ellis says downtown Hartford will have about 1 million square feet of prime office space available for lease at the end of this year. The firm is now predicting that in the next three years, tenants will lease just 250,000 square feet of what's available.
John M. McCormick, executive vice president at CB Richard Ellis in Hartford, said Islam's building would be competing against marquee downtown buildings, such as CityPlace I, 20 Church Street and Goodwin Square.
But its design as a "green" building, a first for downtown Hartford, could give it a boost, he said.
Islam says he can keep construction costs down because of the slow economy. Contractors will be aggressive in their bidding, he says. Though that may be to his advantage, new construction would still probably mean having to charge higher rents, experts say.
Two weeks ago, Islam quoted $26 a square foot, without utilities, taxes and insurance costs. Right now, existing Class A space is being offered at $20 to $24 a square foot, including those expenses.
Once you add the expenses in, tenants could be faced with the equivalent of $40 a square foot in costs.
Reprinted with permission of the Hartford Courant.
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