Next up in our New England Market Overview recap series, we cover the Hartford market. Our Connecticut team presented on the state of the industrial, office and investment markets.
Industrial Market Overview
John Reed, Senior Vice President/Partner, led with an in-depth overview of the Greater Hartford Industrial market.
“Last year there was 4 MSF of industrial volume and 1 MSF of net absorption. Consequently, the vacancy was down 9.2% from 2015. This led to improving values, rising lease rates, increased sales prices and higher land prices per acre, creating a premium on large industrial sites.” – JR
“The distribution model has changed. Drivers need to get to their destination and back in one day. Being centrally located in New England has fueled this demand. With the evolution of e-commerce, next-day—if not same-day—delivery will continue.” – JR
“UPS absorbed 230,000 SF of space at Cornerstone’s 1 Market Circle in Windsor. FedEx Ground is building a 525,000 SF distribution center at 1000 Middle Street in Middletown. You may recognize this as the former 1 MSF Aetna office campus; it is a perfect reuse of this property. This is the fourth FedEx operation established in Greater Hartford in the last four years.” – JR
“Due to the diminished inventory of quality existing buildings, some users are having to build.” – JR
Our industrial forecast for 2017 includes:
- Continued demand for large existing buildings
- Continued demand for large permitted sites
- One million square feet of absorption in 2017
- 2017 will be a better year than 2016
Office Market Overview
John McCormick, Executive Vice President/Partner, and Alexis Augsberger, Vice President, covered the Connecticut Office market.
“2016 was a relatively flat year for leasing velocity, with renewals outpacing relocations. The market saw approximately 100,000 SF of net absorption and the sublease inventory was reflective of a fairly healthy economy.” – AA
“The Greater Hartford Office market is still very much a traditional economy. By comparison, in Metro Boston approximately 40% of the tenants in the market for 2016 identified themselves as ‘tech’ companies.” – JM
“Buildings in submarkets with walkable amenities and superior highway access led the way in 2016.” – AA
Our office market forecast for 2017 includes:
- Increased renewal activity
- Continued urban migration
- State and City budget impacts on the region
Investment Market Overview
Patrick Mulready, Senior Vice President/Partner, covered the Connecticut Investment market.
Our investment market forecast for 2017 includes:
- Continued demand for industrial product
- Interest rates will have minor impact on pricing
- Liquidity not going away
- Overall lower sale volume
- Strong pricing for well-positioned assets with good fundamentals
Overall, market fundamentals in Greater Hartford are strong and the outlook is positive for 2017, particularly in the Industrial Sector.
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