Office buildings capture a lot of attention, soaring above cities and dominating skylines.
But in Greater Hartford, there is another, seemingly unlikely slice of commercial real estate increasingly competing for the spotlight.
Industrial properties are drawing more attention as Greater Hartford emerges as a key center for warehousing and distribution, and investors still have plenty of cash to put to work.
Strong leasing of warehouse space pushed vacancies for all industrial space in Greater Hartford down to 10 percent in the quarter ended Sept. 30, the lowest level in 10 years, and 2 percentage points below the same period a year ago, according to Cushman & Wakefield, the commercial real estate broker.
Asking rents rose 9 percent in the same period, a jump not seen for 15 years, Cushman & Wakefield reported.
"We've definitely had increased activity since July," said Christopher Metcalfe, a broker at CB Richard Ellis in Hartford, "and it's happened in a short period of time."
Greater Hartford's location near I-91 has made it attractive for distribution operations in New England and elsewhere in the Northeast.
The leasing is helping to fill millions of square feet of vacant manufacturing space abandoned since the 1980s following the decline of defense spending and intensified overseas competition. It is also spurring construction of new space designed with 30-foot ceilings now being demanded by distributors.
There has long been a glut of industrial space in the market, especially from the massive plants built in the 1950s and 1960s. But in recent years, owners have divided them into smaller spaces, and they've caught the eye of distributors.
That's been the case at the old, sprawling Fafnir Bearing Co. plant in Newington. The 660,000-square-foot plant is now about half leased, with half of the tenants in the distribution business. Recently, German door distributor Schüco leased about 80,000 square feet in the plant.
Tim D'Addabbo, a broker at Cushman & Wakefield, said the shrinking amount of space suitable for warehousing has forced some tenants to look at older buildings that might not have the ideal ceiling heights.
"There just hasn't been that much construction in the past 15 years," D'Addabbo said.
Although demand for warehouse space appears to be heating up, developers have been cautious about new construction.
The largest project this year has been the speculative three-building Winwood Business Park in Rocky Hill, totaling 154,000 square feet. Leases have yet to be announced for the space.
In Windsor, Griffin Land & Nurseries completed two buildings on Rainbow Road, totaling about 275,000 square feet, about a third of which is already leased. The buildings were built without leasing agreements with tenants.
Tim Lescalleet, a senior vice president at Griffin Land, said the company is optimistic about the growth of warehousing and distribution in the Greater Hartford area.
"Our tag line is we always try to keep one building ahead of the market," Lescalleet said.
A third of one of Griffin Land's new warehouses, at 755 Rainbow Road, was recently leased to Europa Sports Products, a distributor of nutrition supplements based in Charlotte, N.C. Europa said the Windsor distribution warehouse — the company's fifth — would ensure one-day shipping for customers all over the Northeast. Europa couldn't be reached for comment Monday.
Lescalleet said Griffin Landcould break ground on another warehouse before the end of the year because a potential tenant has expressed an interest in leasing 100,000 square feet of space. He declined to name the tenant because talks were at an early stage.
In the quarter ended Sept. 30, the average asking rate for industrial space rose 9.3 percent to $5.13 a square foot compared with the same period a year ago, Cushman & Wakefield reported.
Some have expressed concern about the lower-paying jobs that are brought with an increase in warehousing in the Greater Hartford area.
John Tirinzonie, an economist at the Connecticut Department of Labor, said some warehouse jobs pay almost as much as the manufacturing jobs they're replacing, sometimes from $10 to $15 an hour for full-time workers.
The state labor department doesn't break down employment statistics for warehouse jobs or by areas of the state. But Connecticut gained 500 jobs in warehousing, transportation and utilities in the past 12 months, according to a report released Monday.
Tirinzonie said most of those jobs, however, are related to warehouse operations and the transportation needed to ship the goods.
Reprinted with permission of the Hartford Courant.
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