Home Hotel industry Major Hartford employers cut office space as hybrid working takes hold

Major Hartford employers cut office space as hybrid working takes hold

0

HARTFORD – Two large employers in downtown Hartford are significantly reducing the amount of office space they will rent in the city over the next year, another sign of the impact of the increased option of working from home caused by the pandemic.

The companies — healthcare giant UnitedHealthcare and financial services provider Prudential Financial — plan to cut their leases by hundreds of thousands of feet, moves that will ripple through a downtown area where restaurants and other businesses have long depended on office workers as an important part of their clientele.

UnitedHealthcare did not return multiple calls for comment on Friday, but sources familiar with the downsizing said the company plans to reduce its lease at CityPlace I to about a tenth of its current 350,000 square feet.

CityPlace I is downtown Hartford’s landmark office tower and the city’s tallest. The owner of the 38-story skyscraper, Paradigm Properties of Boston, did not respond to calls for comment on Friday.

Prudential Financial confirmed on Friday that it would make a significant reduction at 280 Trumbull St., One Commercial Plaza, from 250,000 square feet to around 25,000.

A spokesperson said the decision to lease significantly less office space was a result of both adopting a hybrid work schedule, but also the sale of his retirement business, which had a large operation in downtown Hartford. As a result, Prudential needed much less space in the city.

The problems in the office market come after the city’s hospitality industry was hit hard at the start of the pandemic, as business and leisure travel plummeted. One hotel, the Hilton on Trumbull Street, nearly closed, but a plan to convert upper floors into apartments keeps the hotel open but under a different name.

The city’s convention sector has also taken a hit and is only now beginning to pick up.

The dramatic reduction in large leases comes as the city progresses building up its downtown residential population and manages to lease long empty storefronts.

Hartford Mayor Luke Bronin said the dramatic reductions in office leases are “powerful pandemic aftershocks, and they’re hitting the city hard.”

But Bronin said office rental rates in the city’s downtown area are much more affordable than in other cities and could represent an opportunity for Hartford.

“But there is no doubt that we face massive disruption in the office market, and that means we need to be all the more aggressive in accelerating residential development and supporting retail, restaurants, sports, downtown entertainment and culture,” Bronin said in a post.

David Griggs, president of the MetroHartford Alliance, the region’s chamber of commerce, said office downsizing is happening across the country, but not all of it has been hit as hard as Hartford.

“We have to find solutions for Hartford as to what we do with this excess space, because [UnitedHealthcare and Prudential] are just the last,” Griggs said. “There will be more, and I don’t want to say it, but there will be more.”

News @3

News @3

Daily

Find the day’s top headlines sent straight to your inbox weekdays at 3:00 p.m.

Griggs, Bronin and other city leaders have previously spoken of the need to find different ways to attract people to a downtown that has long relied on office workers. One way, they say, is through entertainment, highlighting the gains that will make areas such as Pratt Street a destination.

Another is to build the downtown residential base where 2,800 rentals have been added in and around the city center since 2014. Some said on Friday that converting former offices into these apartments will help soften the blow from the cuts of staff but certainly not to erase it completely.

There have also been pushes for the vision of making the city a hub of innovation and a place to foster high-tech start-ups in a variety of industries.

But the reality of increasing vacant office space is discouraging. The effects of businesses needing less space as a result of the pandemic with the emergence of the hybrid work schedule had already begun to show in downtown Hartford.

Last month, law firm Robinson + Cole announced plans to shrink from 120,000 square feet at 280 Trumbull St. to less than 75,000 square feet at One State Street, the Hartford Steam Boiler Building.

The owners of 20 Church St., the “stilt building,” are facing foreclosure on this office tower, amid tenant downsizing. But Shelbourne Global Solutions LLC, of ​​Brooklyn, NY, said this week it was confident it would avoid the foreclosure, having prospects of new tenants.

Kenneth R. Gosselin can be reached at [email protected]