Greater Hartford Wrestling With Surplus Of Empty Industrial Space
KENNETH R. GOSSELIN
January 26, 2010
Start with a few big industrial buildings in Greater Hartford going dark in 2009, and the numbers can add up awfully quickly.
A direct mail company goes out business in Berlin: 250,000 square feet. A distributor in Windsor closes shop: 300,000 square feet. An insurer vacates back office space in Windsor: 267,000 square feet.
But you don't get to the horrible year for industrial and warehouse space that the region just finished without a lot of little blocks of space closing up, too. In all, Greater Hartford had 2.3 million square feet of space come back on the market last year that wasn't offset by new leases.
"We haven't seen this in 10 or 15 years," Robert J. Daglio, senior vice president at commercial real estate services firm CB Richard Ellis in Hartford. "People stalled, worried about what to do, what not to do. ... It was a very dismal year."
The 2.3 million square feet represents 3.2 percent of the total 71 million square feet of industrial space in the region. The figures do not include space owned by the companies that occupy them, such as Pratt & Whitney Aircraft's East Hartford complex.
Vacancy for industrial and warehouse space jumped three percentage points to 14 percent, as of Dec. 31, compared with a year earlier, CB Richard Ellis said.
While some in the industry say they are now seeing a pickup in potential tenants, the improvement is likely to be only modest this year.
And it is difficult to get by last year's carnage. The amount of space returned to the market is a key indicator of demand, and a gauge of local economic activity.
The trend in Greater Hartford was driven by cutbacks and layoffs; consolidation of distribution centers; and a pervasive hesitation about taking on new space when the direction of the economy remained fuzzy.
Sean P. Duffy, executive director at Cushman & Wakefield in Hartford, said many industrial tenants opted to renew leases in their current spaces for a couple of years to wait things out, rather than move to new spaces.
"There was just too much long-term uncertainty," Duffy said.
Connecticut continued to lose jobs last year, as the state's unemployment rose to its highest level since the late 1990s. The manufacturing sector was among the hardest-hit last year, losing 15,700 jobs, or 8.5 percent. "A lot of manufacturers are going out of business and some are moving out of state," said economist Ed Stockton, of Stockton & Co., a real estate consulting firm.
Warehouse employment is lumped together with transportation and utilities.
That category lost 2,800 jobs, or 5.4 percent of its total, last year.
Consolidation of distribution warehouses also accelerated in 2009. Once, companies had big networks of distribution centers, but they are getting combined as less space is needed for storage in the age of electronic commerce.
One example of that is in East Hartford's Prestige Park. The 110,000-square-foot warehouse at 311 Prestige Park Road was built in the 1980s to house the old Connecticut Bank & Trust Co.'s back office and document storage operations. It continued to serve successor banks including Fleet and finally Bank of America.
Finally, last year it was closed and consolidated with another facility.
East Hartford town officials say they believe the facility will find another tenant because of its high ceilings, which are highly prized for warehousing. The town also is offering real estate tax breaks.
Their bigger worry, as with towns throughout the region, is what to do with older space.
"Some is so obsolete," Jeanne Webb, town director of development said, "that you can barely get a tenant."
Reprinted with permission of the Hartford Courant.
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