The Greater Hartford office commercial real estate market didn’t gain much traction in 2011, with landlords giving back space overall as the state’s slow recovery makes employers skittish about taking on new space.
The region’s 25.9 million square feet of office space stood 21.9 percent vacant at the end of the fourth quarter, according to realty brokerage CB Richard Ellis, which presented its 2012 market outlook Friday at the Hartford Marriot.
In Hartford alone, the office vacancy rate stood at 25.5 percent, including a 30 percent vacancy rate in the central business district.
Overall, Greater Hartford tenants gave up 163,670 square feet of space in 2011.
The sparse demand for new office space made 2011 a tenants market, forcing landlords to continue to offer incentives of short-term lease flexibility, tenant improvement allowances and free rent concessions, according to CB Richard Ellis.
John M. McCormick, CBRE’s executive vice president, said 2012 won’t be much different, as the European debt crisis, U.S. presidential election and high unemployment rate is still creating uncertainty in the economy.
In Hartford, McCormick said there could another 150,000 square feet of negative absorption in the Class A office market, which will put further pressure on rental rates and concession packages.
And most of the activity will be tenant relocations within the market, with the potential for suburban tenants to relocate to Hartford to take advantage of discounted rents.In terms of new tenants to downtown Hartford both Hartford Healthcare and Ameriprise Financial planted their flags in the central business district in 2011.
Hartford Healthcare leased 22,000 square feet at One State Street, where they plan to relocate their executive offices. Ameriprise leased 10,000 square feet at CityPlace II, relocating from East Hartford.
Other significant 2011 transactions in Hartford’s central business district included:
• UBS Realty leasing 49,000 square at 10 State House Square, relocating from 242 Trumbull St.
• Marsh Companies leased 37,000 square feet at 20 Church St.
• Mayo Crowe LLP and McCormick Paulding & Huber renewed leases in City Place II
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