NORTHEAST SNAPSHOT, JANUARY 2005

Hartford, Connecticut, Industrial Market

In 2004, the industrial market in Hartford, Connecticut, and surrounding areas began to improve upon the low levels of activity seen in the previous 2 years.

According to Mark Duclos, managing director of Sentry Commercial Real Estate Services Inc. of Hartford, the market has become increasingly active throughout the region, including cities just north of Hartford into Massachusetts. “The significant difference between the past 12 months and the previous 24 months is the appearance of expanding companies versus a predominantly investor-driven market,” says Duclos. The combination of local companies expanding and outside companies with large distribution requirements entering the market is driving down vacancy rates and fueling build-to-suit development.

Most development in the Hartford market is build-to-suit; speculative development has been limited, albeit relatively successful. “The reason for the design/build success can mostly be attributed to the lack of quality warehouse/distribution product in the region,” notes Duclos. The difficulty in finding economically viable development opportunities is one major reason for the scarcity of speculative building.

Even as industrial activity picks up steam, there have been few new developments in the greater Hartford area that have had a significant impact on the market. The most significant speculative project completed in the past 12 to 18 months is Griffin Land’s multi-building high-bay warehouse development on Rainbow Road and International Drive in Windsor. “These high-bay industrial buildings are filling a long-known void in the marketplace,” says Duclos. “Tenants have appreciated the product and paid premium prices as well.”

Rental prices in the area run from $2.50 to $4.50 for triple-net warehouse space with 16-foot to 18-foot ceiling heights; $4 to $6.25 triple-net rate for 22-foot to 30-foot-ceiling heights; and $5 to $7 triple-net rate for tech space.

High-tech space has had limited demand; property owners are trying to attract tenants such as warehouse users and sales/service businesses. Manufacturers — though continuing to experience decreasing activity throughout Connecticut — have completed a number of transactions in the past 6 months, says Duclos.

As the economy improves and the real estate markets subsequently follow, the industrial market in the Hartford area will continue to build upon recent signs of growth. One area to watch for growth in the near future is the Interstate 291 corridor from Manchester to Bloomfield through South Windsor. Businesses will continue to pursue these areas due to improved traffic access to most markets along the relatively new I-291 corridor, as well as the increase in new retail and residential developments in the area.

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