🔒Hartford Mayor Arulampalam eyes state funding request for empty office space conversions

Mayor Arunan Arulampalam launched his first term in office with a goal of making Hartford the easiest Connecticut community in which to run a business.

Nearly a year later, Arulampalam isn’t declaring “mission accomplished,” but he is touting significant progress.

“I think if you talk to people who started businesses in the last six months, and who started businesses prior to that, I think they’ll tell you that it is getting quicker to get licenses in the city of Hartford,” Arulampalam said.

Key to this business-friendly push has been putting new staff in important positions.

On Jan. 2, his second day in office, Arulampalam appointed former Wethersfield Town Council member Patrick Pentalow as economic development director. In that same month, Arulampalam named Don Chapman — a well-known former senior city planner — as head of the newly created Office of the Business One-Stop.

The new city outpost — which now has a staff of two — was created to help small businesses navigate the sometimes-cumbersome bureaucracy of City Hall. Arulampalam said the office fosters a “healthy tension,” balancing necessary city oversight with practical business needs.

Halfway through the year, Arulampalam appointed former Infosys executive Jeff Auker as the city’s new development services director. The position oversees Hartford’s planning and economic development arms.

Auker led tech giant Infosys’ emerging technology and innovation efforts in Hartford since 2018.

“I think it helps to have someone leading development services who has run a major business in the city,” Arulampalam said. “Jeff, when he was head of the Infosys hub, navigated state and city government. Simple things like getting a sign up on a building can turn into a real ordeal. Having someone on the other side, who really understands where those businesses are coming from and wants to make it easier to do business here, has really made a big difference.”

Shared services

The mayor has begun to confront other major challenges.

Arulampalam and East Hartford Mayor Connor Martin, in October, announced a commitment to find ways to share services, including potentially common purchasing and even personnel, and develop a joint vision around economic development, tourism and culture. This could ultimately lead to more efficient, effective and expanded services, as well as joint economic development efforts that buoy both communities.

“I think if we are successful, it will be in many ways the most momentous thing we do in our time here in the city,” Arulampalam said.

Also in October, Arulampalam announced he had set aside $16.5 million — mostly from a fiscal year 2024 budget surplus — for new youth, housing and neighborhood business programs.

While the mechanics of those initiatives need to be fleshed out, Arulampalam said he envisions spending $11.5 million on business and housing development along major commercial arteries in Hartford’s neighborhoods.

Big request

Dealing with the city’s high office vacancy rate — brought on by employers’ pandemic-induced embrace of remote work — has been another big priority, Arulampalam said.

Several of the city’s largest office tenants have yielded hundreds of thousands of square feet of leased space, increasing vacancy rates and lowering property values.

Real estate services firm CBRE estimated downtown Hartford’s office vacancy rate for Class A buildings was 26.7% at the end of the third quarter, while Cushman & Wakefield calculated an overall downtown Hartford office vacancy rate of 35% at the end of the second quarter.

Other landlords have said the true downtown office vacancy rate — especially for larger, Class A buildings — is closer to 40%, when soon-to-expire leases are taken into consideration.

The headwinds have caused several major Class A office towers — the Metro Center at 350 Church St. (293,639 square feet); the Stilts Building at 20 Church St. (419,600 square feet); and much of the Constitution Plaza office complex — to fall into foreclosure.

The situation is a major concern for a city that has long depended on downtown office buildings for a significant chunk of its property tax base, and office workers to fuel downtown restaurants and shops.

Arulampalam said he’s preparing to make a “one-time” request for state funds to support the conversions of a large chunk of downtown office space into apartments.

“It is clearly going to require the help of the state to address office vacancies,” Arulampalam said. “It’s important to the city because it has an impact on our downtown in terms of vibrancy, but most importantly because it has a huge impact on our tax base.”

Conversions, the mayor said, would create additional downtown housing, a win for a city striving for vibrancy and a state government eager to alleviate a broader housing shortage. It would, presumably, also funnel companies into remaining office buildings, boosting occupancy rates.

If Arulampalam gets his way, those conversions would include the state’s two-tower, 575,000-square-foot office complex at 450 Columbus Blvd. The property, formerly known as Connecticut River Plaza, was purchased by the state in 2013, under then-Gov. Dannel P. Malloy, for $34.5 million as a way to shrink the government’s leased space. Since then, numerous state agencies have consolidated into that building.

The mayor has asked state officials to consider selling the property to a developer for conversion into apartments.

Funds raised by that sale could be used to rent space in other, privately held downtown office towers for several years, giving the market a much-needed shot in the arm, Arulampalam said.

A working group with high-level staff from the city, state Department of Economic and Community Development and Capital Region Development Authority formed this past summer to begin analyzing which buildings are best suited for conversion.

Those discussions have also involved Gov. Ned Lamont’s office.

The group is expected to hire a consultant to help with the analysis, so a data-driven request for state funding can be made, Arulampalam said.

“The goal is to have a one-time ask of the state to right-size the office space, converting some into residential,” Arulampalam said. “We know there is massive demand for residential in our downtown. Those buildings often have waiting lists (for tenants) by the time we cut the ribbon on them.”

In a recent interview, Lamont said he has had talks with downtown landlords, including LAZ Parking CEO Alan Lazowski, about the office market. He noted the state has already been assisting the city of Hartford in office-space conversions via funding allocations to CRDA.

The quasi-public state agency has provided low-interest loans and tax relief to developers, yielding 3,353 apartment units downtown since 2013. More than 1,500 additional units are in the pipeline.

“Some of these office buildings are custom-made to go residential,” Lamont told the HBJ. “Some have big empty, unused space in the middle of the building, which means it’s okay for commercial, but it’s not very good for residential. So, we are going over that analysis now, but we’ve done a fair amount (to support office conversions in the city).

The city has also engaged Vernon-based Tyche Planning & Policy Group to help craft zoning regulations that will make conversions easier and reduce barriers to other, creative uses for empty office space.

That work might lead to gyms, restaurants, golf simulators and other non-traditional uses in office spaces, Arulampalam said.

“We are trying to figure out a whole host of ways to use vacant office space to continue to build on the vibrancy you are seeing grow in our downtown, but also to fill up the space to ensure these buildings are sustainable,” Arulampalam said.

Corporate cooperation

The mayor said he’s also been conducting regular meetings with some of the city’s largest employers — including CVS/Aetna, Hartford HealthCare, Travelers and The Hartford — that have helped germinate some big ideas he hopes to act on.

One involves creating a centralized procurement portal that would allow the city and its small businesses to leverage the buying power of the big corporations to save money on purchases ranging from copier paper to catering.

Another would create a centralized jobs portal that brings together more than two dozen different job training and hiring programs, to make it easier for the city’s major employers to find local talent.