🔒Bordonaro: Post Labor Day, Hartford businesses return to a new normal

The end of summer and passing of Labor Day typically signals a return to normal for many businesses.

Not in 2020. The coronavirus pandemic continues to cast a long shadow over Connecticut’s economy, even though the state has done a better job than most of containing the virus. Still, Hartford office buildings are underoccupied and remote work remains the norm for many professional workers.

In May, I penned a column stating I wouldn’t return to the office full time until at least the start of September. That turned out to be accurate. I did go to our Lewis Street office downtown on occasion during the warm-weather months and it was a nice reprieve from working from home.

But Hartford was eerily quiet during the dog days of summer, with some marquee restaurants remaining closed through September — Max Downtown and Black-Eyed Sally’s — and major city hotels sitting relatively empty and on the edge of financial ruin.

Still, it’s not all doom and gloom out there. There are plenty of industries and businesses doing just fine despite the challenging environment. For example, in this week’s issue, HBJ highlights accounting and law firms that are seeing steady or even increasing business amid the pandemic.

As we head into the crucial final months of the year, it’s a good time to take the economic temperatures of both Greater Hartford and the state.

And one of the best ways to do that is to assess the region’s office space market nearly seven months into the pandemic. It’s no secret that COVID-19 has thrown Hartford’s office market into limbo as many companies, particularly early in the pandemic, delayed or postponed lease expansions and renewals and shifted to remote work.

At the end of the second quarter, downtown Hartford’s overall vacancy rate stood at 18.4%, which is up from 15.9% in the year-ago period, according to CBRE data. The central business district’s vacancy rate was even higher at 20.4% compared to 17.6% a year ago.

Overall, downtown Hartford tenants shed 43,781 square feet of space during the second quarter, which isn’t great but was still better than the second quarter of 2019, when businesses shed nearly 100,000 square feet of office space.

The overall numbers are trending negatively but they aren’t apocalyptic, at least not yet. There have also been some new tenants downtown, with Liberty Bank recently signing its first Hartford lease at 100 Pearl Street, and Hartford HealthCare debuting new space in the same building.

For broader context, downtown Hartford’s office vacancy rate peaked at 25% during the Great Recession last decade.

Could we get there again? In time, I think we could as more companies adjust to permanent remote work environments and reduce their office footprints, but that won’t happen overnight.

Greater Hartford’s suburbs didn’t fare much better as tenants shed a combined 63,203 square feet of office space and the vacancy rate increased to 20.9% compared to 18.6% a year ago, CBRE data shows.

Statewide, Connecticut’s job market remains fragile with a double-digit unemployment rate.

So, what’s this all mean? Economic indicators won’t be pretty anytime soon and the current business environment is challenging. Still, opportunity exists.

Most of us can’t wait to turn the calendar but we can’t give up on the rest of 2020. Keep focused. Don’t get distracted by negative headlines. And innovate your way to new business.

The region’s and state’s economic prospects depend on it.