The commercial real estate markets in the New Yorks and L.A.s of the country have rebounded significantly since the recession, with sales, leasing and development at a healthy, if not brisk, pace.
Now, a turn may be coming for smaller “secondary” markets like Hartford, a new report this week forecasts.
The Hartford-West Hartford-East Hartford metro market is on a list compiled by NAIOP, the commercial real estate development association, of 34 secondary markets that could see a bump up in activity this year.
“We will likely see this trend take hold in secondary markets,” said Thomas Bisacquino, NAIOP’s president and chief executive. “If that happens, it will be real positive sign that our industry is feeling better about the economy and investment opportunities, and it will be good news for lots of medium-sized American cities.”
Patrick Mulready, senior vice president and partner at commercial real estate services firm CBRE-NE in Hartford, told me today that he wasn’t surprised Hartford area was on the list.
Major markets such as New York and Los Angeles don’t have a lot of attractive properties available for investors. The properties either recently sold or are owned by long-term investors.
“That is leading to additional interest in markets like this,” Mulready said, of Hartford.
Mulready said there was already evidence of that in 2013, with major sales in the Hartford area. Those included the $106 million sale of Blue Back Square to Starwood Capital Group. The sale was particularly noteworthy because Starwood is an institutional investor outside the market, Mulready said.
Mulready said the most attractive office buildings will be stand-outs like Downtown Hartford’s Goodwin Square, which includes the long-shuttered Goodwin Hotel. The property is expected to go up for auction this year after being lost by Northland Investment Corp. to foreclosure.
CityPlace II, also lost by Northland to foreclosure, also is expected to be sold but only after the tenant roll is boosted. CityPlace II now has a 34-percent vacancy, Mulready said, and leasing could be a challenge because space is scattered throughout the tower.
NAIOP’s list of 34 “secondary” commerical real estate markets on the cusp of a bump up:
List of Secondary Markets
Austin-Round Rock-San Marcos, TX
Charlotte-Gaston-Rock Hill, NC-SC
Greensboro-High Point, NC
Hartford-West Hartford-East Hartford, CT
Kansas City, MO-KS
Las Vegas-Paradise, NV
Louisville-Jefferson County, KY-IN
Milwaukee-Waukesha-West Allis, WI
Minneapolis-St. Paul-Bloomington, MN-WI
New Orleans-Metairie-Kenner, LA
Oklahoma City, OK
Providence-New Bedford-Fall River, RI-MA
Salt Lake City, UT
San Antonio-New Braunfels, TX
St. Louis, MO-IL
Tampa-St. Petersburg-Clearwater, FL
Virginia Beach-Norfolk-Newport News, VA-NC