🔒With elevated office vacancy rates, 2025 will continue to be a tenant’s market

There were no surprises in 2024, as the Greater Hartford office market performed as anticipated.

The vacancy rate within Hartford’s central business district rose slightly as the last tranche of major lease expirations worked their way through the system.

The most recent CBRE third-quarter 2024 statistics highlighted office vacancy rates in the five Greater Hartford submarkets ranging from 15% to 50%, indicating it remains a tenant’s market. West Hartford and Glastonbury continue to be the exceptions, both commanding tenant activity, the lowest vacancy rates and the highest effective lease rates.

Corporations continue to seek amenity-rich buildings or neighborhoods as the traditional idea of “the office” has been reshaped in the face of hybrid work.

Employers are focused on creating social and collaborative workspaces to attract employees back to the office. Seating is flexible with non-assigned offices and workstations. Many landlords have repurposed underutilized building space into conference facilities, fitness centers, cafés, game rooms, tenant lounges and even pickleball courts.

Landlords are also getting more flexible with their parking garages, installing license plate reading technology, allowing opposite schedule employees to share parking.

These amenities are attractive to tenants, reducing their overall leased footprint and other related occupancy costs.

Several notable lease deals occurred in Hartford and the surrounding suburbs in 2024:

• UConn expanded its downtown Hartford presence to take advantage of the former University of St. Joseph’s education space at Hartford 21, leasing 49,500 square feet for academic and research programs. Students will be welcomed for classes in fall 2025. UConn has also announced student housing across the street at 242 Trumbull St.’s annex, for fall 2026.

• Law firm Pullman & Comley reaffirmed its long tenancy in Hartford by renewing 36,500 square feet at 90 State House Square.

• Law firm Jackson Lewis leased 18,600 square feet at 10 State House Square in Hartford, allowing for minimal disruption and ease of relocation from 90 State House Square.

• Premier Research leased 20,300 square feet in East Hartford, at 77 Hartland St.

• Standard Builders relocated to a new 14,000-square-foot corporate office at Putnam Park in Wethersfield.

• Companion & Homemakers leased 10,800 square feet at 76 Batterson Park Road, in Farmington.

• Benesch Engineering leased 9,400 square feet at 200 Glastonbury Blvd., in Glastonbury’s Somerset Square.

Last year also marked the 11th straight year of urban migration from the suburbs, totaling over 50,000 square feet.

Companies continue to be attracted to the Capital City’s walkability, ease of highway accessibility, and variety of dining, shopping and entertainment options.

Tenants that committed to downtown in 2024 include:

• Engineering firm Fuss & O’Neill relocated its headquarters from Manchester to One Financial Plaza — The Gold Building. The company, founded in 1924, leased approximately 26,000 square feet.

• Law firm Gordon Rees Scully Mansukhani relocated from Glastonbury to Hartford, signing a new lease for 14,500 square feet at One Financial Plaza.

• Connecticut Association of Realtors relocated from across the Connecticut River in East Hartford to 9,800 square feet at 90 State House Square.

• Boy Scouts of America in November sold its 12,000-square-foot building at 60 Darlin St., in East Hartford, for $860,000, and is anticipated to soon announce a relocation to downtown Hartford.

Looking forward to 2025, it will continue to be a tenant’s office market in Greater Hartford; however, we anticipate continued tightening in the pockets of West Hartford and Glastonbury.

Large employers in Hartford have rightsized their office footprints and are making progress on returning employees to the office at least three days per week. In addition, more apartments will be added in the city.

RMS Cos.’ new phase at the North Crossing development (near Dunkin’ Park) is currently under construction, with the parking garage taking shape and 500 apartment units planned. We also anticipate welcoming new apartments in the first quarter of 2025 at both 525 Main St., and the former firehouse at 275 Pearl St., for a combined 80 units.

The addition of new apartments encourages economic growth for the Capital City and brings welcomed “feet on the street” to the retailers, restaurants, and all the cultural attractions Hartford offers.

These are important building blocks in the progression of Hartford’s growth to a more vibrant central living district.

John McCormick is executive vice president and Anna Kocsondy vice president in the Hartford office of real estate services firm CBRE Inc.