Construction of a large-scale Wallingford headquarters for Mortgage Lenders Network ground to a halt in 2007, leaving a massive building shell next to Interstate 91 as an imposing monument to the collapse of the subprime lending industry. The project on 105 acres at 108 Leigus Road kicked off in 2006, then faltered a year later […]
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Construction of a large-scale Wallingford headquarters for Mortgage Lenders Network ground to a halt in 2007, leaving a massive building shell next to Interstate 91 as an imposing monument to the collapse of the subprime lending industry.
The project on 105 acres at 108 Leigus Road kicked off in 2006, then faltered a year later when subprime mortgage lender MLN failed.
Then in 2010, developers signed health insurer Anthem Blue Cross Blue Shield to a 10-year lease for three quarters of the 288,795-square-foot, state-of-the-art office building that was completed in 2012.
Today, however, the Campus at Greenhill reflects another challenging business trend: the rapid decline of the office market in the wake of the COVID-19 pandemic.
Anthem has shrunk its presence to 48,138 square feet. Other tenants have come, even grown in the building, but it’s still 60% vacant. The mortgage holder that foreclosed on the building in 2019 has put it up for auction.
Wallingford’s assessor values the building at $18.1 million and the surrounding land — currently held in a lease ending in 2112 — at $10.8 million.
The building and lease are owned by a limited liability company controlled by Miami-based real estate investment firm Rialto Capital Management.
The starting bid for the auction that begins April 3 is $2 million. The property is being sold on auction website Ten-X.
Rialto declined to comment about the pending sale.
Anthem Blue Cross Blue Shield, in a statement, said its embrace of a more flexible work model has driven the company’s office space downsizing.
“We consistently assess our office space needs to align with our hybrid work model, which allows associates to leverage the office based on their work needs with the flexibility of working remotely,” the company said. “We recently redesigned our space in Wallingford with new individual workspaces, collaborative meeting and training spaces to create improved work environments for our employees and enhance our strong culture.”
Upbeat prospects
Robert Motley, a senior director with brokerage firm Cushman & Wakefield, said he’s confident the property will sell well above the initial bidding price. The modern, LEED-certified building has a below-floor heating and cooling system that increases comfort and reduces expenses, he noted.
It offers a fitness center, cafeteria and convenient access to I-91, all on a handsome suburban campus with walking paths.
Motley said a site study has shown the property can also support construction of four new buildings, each at about 31,000 square feet. He suggests it’s well suited for medical offices.
“Between the shoreline and Waterbury and the surrounding communities, there is nothing like this out there,” Motley said. “We expect, given the location, the quality of the building, its age and the quality of the tenants, we will have potential bidders from around the country.”
Motley, as of March 7, said Cushman & Wakefield had fielded more than 30 inquiries from potential buyers.
In addition to Anthem, architectural firm Burns & McDonnell occupies 48,606 square feet at 108 Leigus Road. Liberty Mutual leases 13,963 square feet and global fluid engineering firm Sulzer has a 4,000-square-foot office.
“It’s beautiful,” said one Burns & McDonnell employee as she stopped for lunch at the cafeteria on March 7. “The temperature is always on point. It’s a nice, beautiful office.”
Suburban office struggles
Mammoth suburban office campuses in Connecticut have struggled in recent years as companies have embraced remote work and seen their space needs shrink.
Voya Financial put its 470,000-square-foot Windsor office building on the market last August. The building was constructed for Voya (formerly ING) on a 76.8-acre campus for $100 million in 2007. Voya last year said it was considering selling the property and leasing back 85,000 square feet as it embraced remote work.
Last June, insurer The Hartford announced plans to sell or lease its 457,396-square-foot Windsor office building at 1 Griffin Road North, reassigning 500 workers there to downtown Hartford. The Hartford has since listed the property — erected in 2007 on 72.9 acres — for sale. It’s been on the market since January and “We are actively marketing the Windsor building for further lease or sale,” The Hartford said.
In November 2021, a pair of New York investors purchased MetLife’s 548,301-square-foot Bloomfield office building for $10.4 million. The partners have since invested millions more in repairs, upgrades and new amenities.
MetLife paid $50 million for the 1983-vintage building in 2007.
According to a market analysis by brokerage firm CBRE, office vacancies in Hartford and 17 surrounding towns reached 21.5% at the end of the fourth quarter of 2022, with 27.3% of space available for lease.
Greater Hartford office tenants last year shed 1.2 million square feet of space.
Wallingford, a little further south, is also facing challenges.
“It’s slow and it’s not rebounding anywhere near what we hoped after COVID,” said Wallingford Economic Development Commission Chairman Joe Mirra of the town’s office market.
The Campus at Greenhill is perfectly suited for offices, but zoning also allows a range of uses, Mirra said. He plugged the low electric rates offered by the town-run utility company, along with other appealing qualities.
“It’s easy off and on for highways, accessible to two major airports,” Mirra said. “Also, it’s in the middle of three or four major medical institutions and the workforce is educated.”
Mirra said in the past few months he has fielded several calls from logistics developers interested in vacant spots near the Campus at Greenhill.
Challenges and opportunities
David Griggs, CEO of the MetroHartford Alliance, said Connecticut’s suburban office struggles are mirrored nationally.
“We are seeing the same dynamic across the board,” Griggs said. “The work-from-home model is seeing these structures across the nation becoming, … I don’t want to say obsolete, but I don’t know if there is a better term.”
Griggs said nationwide there is growing contemplation of demolishing suburban office parks, even “relatively new” ones built in the past two decades.
“The good news is we aren’t losing workforce,” Griggs said. “These aren’t companies saying: ‘We are going from 400,000 square feet to 50,000 square feet and we are going to lay off 2,000 people.’ What’s not great news is the excess 350,000 square feet that the company no longer needs and that no company necessarily needs.”
Susan Winkler, vice president of the MetroHartford Alliance and executive director of the Connecticut Insurance & Financial Services group, is a bit more sanguine.
Winkler anticipates rebounding office populations. And insurance and financial services companies will continue to want proximity to Hartford as the “insurance capital of the world,” she said.
“I am an eternal optimist and I always feel the industry is poised for growth,” Winkler said.
