7 CT office-to-apartment conversions that made a difference. A big challenge looms on the horizon.
In marking the $52 million conversion of former state office buildings on Hartford's Trinity Street into more than 100 residential rentals, Hartford Mayor Arunan Arulampalam struck an upbeat vision for the city in the coming years.
'Brick by brick, development by development, this city is becoming one larger city in which every neighborhood feels a part of where we are going and this is an incredible centerpiece for that,' Arulampalam said, at last week's event. 'We are so proud of where the city is going. I hope you are so proud of what you see today and what the future looks like.'
Indeed, the conversion of older office buildings in and around downtown in the last decade have helped absorb obsolete office space. The projects, many of them supported with public financing, have added thousands of rentals to strike a better — but still emerging — balance with the historical dominance of the office towers.
But a big worry looms on the horizon: what to do with space in modern office towers downtown that were battered by corporate downsizings in the aftermath of the pandemic?
'The challenge now is do we take on the 'A' buildings and/or some of the corporate campuses (Aetna)?' Michael W. Freimuth, executive director of the Capital Region Development Authority, said in an email.
How the low occupancies in some of the city's most recognizable office towers are dealt with will have far-reaching consequences. For the downtown economic ecosystem, there are far fewer office workers to regularly help support shops, restaurants and bars. And declining office building values will mean a hit to property taxes collected by the city that pay for municipal services and running its school system.
Class A space is considered the most prime, marquee space. In downtown Hartford, there are five major office towers — two on Constitution Plaza — either in foreclosure or receivership, some the casualty of lenders unwilling to refinance mortgages in a shaky office leasing market both in Hartford and nationally.
Receivership means building owners have lost day-to-day control of their buildings because they haven't been able to make loan payments or refinance.
CityPlace I — the tallest office building in Hartford — fell into receivership after its main tenant, UnitedHealthcare, slashed its leased space as more of its employees in the city worked from home after COVID-19.
Of the roughly 885,000 square feet in the 38-story tower, just 45%, or about 400,000 square feet is occupied, according to CoStar, the commercial real estate analytics firm.
A new analysis by Cushman & Wakefield of the 14 Class A, or prime, office buildings in Hartford's business district showed that overall availabilities were 35.5% as of Mar. 31. That up a full percentage point from 34.5% compared to a year earlier, the analysis by the commercial real estate services firm found.
By the numbers, that's 2 million square feet available out of about 5.7 million.
Nationally, the move to convert idle office space into residential rentals has gained considerable momentum in the past several years, according to a recent report from rentcafe.com, which tracks trends involving apartments.
The report found that the number of apartments set to be converted from office space has skyrocketed from 23,100 in 2022 to a record-breaking 70,700 expected in 2025.
CityPlace and other office towers in the downtown Hartford area may not be necessarily be suitable for apartment conversions. But older, smaller buildings may well be, with their tenants potentially moving into Class A space where lower, attractive rents could be negotiated and owners are hungry for tenants.
For developers, rising construction costs — potentially affected by new tariffs — remain a concern when assessing the viability of projects and whether public funding needs to be increased.
In the legislature, a half-dozen bills — some proposing tax credits — sought at the beginning of the session to encourage office-to-residential conversions. And Gov. Ned Lamont proposed $50 million in his capital budget to support such projects.
In the last decade, Hartford got a jump on converting office space, well before anyone had heard of COVID-19. But the stakes still remain high because the city has more office space than New Haven, Waterbury and Bridgeport combined.
Original use: Office tower
Built: 1967
Conversion cost: $84.5 million, with public funding
# of apartments: 285
Market-rate/Affordable: 80%/20%
Developer: Bruce Becker, Westport
Conversion completed: 2015
Current Occupancy: 98%
Why it Matters: The 26-story office tower once stood out in the city's nighttime skyline, dark and empty — a highly visible reminder of the city's struggle with revitalization. The project was one of the earliest and largest office-to-apartment conversions in the last decade, and provided a crucial test for housing demand in downtown Hartford.
Original use: Masonic Hall
Built: 1894
Conversion cost: $4.5 million, with public funding
# of apartments: 26
Market-rate/Affordable: 100% Market-rate
Developer: Yisroel Rabinowitz, Brooklyn, NY
Conversion completed: 2014
Current Occupancy: 86%
Why it Matters: The former Masonic Hall had struggled to accommodate offices, but was successfully converted into The Grand on Ann apartments. The project, the first to be completed using low-cost financing through the Capital Region Development Authority, established housing on the eastern end of downtown's Allyn Street corridor. CRDA sought to strengthen the residential presence between the XL Center and Union Station. It is uncertain how that vision will unfold now that the federal government has all but chosen an Allyn Street parking lot for a new federal courthouse.
Original use: Offices for wool merchants
Built: 1883
Conversion cost: $14.9 million, with public financing
# of apartments: 63
Market-rate/Affordable: 80%/20%
Developer: Dakota Partners, Waltham, MA
Conversion completed: 2015
Current Occupancy: 84%
Why it Matters: The renovation revived the use of an office building considered an architectural gem, but was in decline with few tenants. The conversion to rental housing added more apartments around Union Station on the west end of Allyn Street. Leasing helped build a track record for downtown rental demand.
Original use: office tower
Built: 1965
Conversion cost: $28.4 million, with public funding
# of apartments: 157
Market-rate/Affordable: 100% Market-rate
Developers: Wonder Works Construction Corp. and Girona Ventures, both of New York
Conversion completed: 2020
Current Occupancy: 97%
Why it Matters: The 12-story office tower at the corner of Pearl and Lewis streets was once a bank headquarters and later, a police substation. Until converted to apartments in 2020, a string of attempts to redevelop the structure into office space, apartments and condominiums failed, leaving the building largely vacant and decaying for years.
Original use: office building
Built: 1950
Conversion cost: $21.5 million, with public funding
# of apartments: 101
Market-rate/Affordable: 100% Market-rate
Developers: Wonder Works Construction Corp. and Girona Ventures, both of New York
Conversion completed: 2019
Current Occupancy: 96%
Why it Matters: The 7-story building was vacant for more than a decade and like the neighboring 101 Pearl occupied a prominent corner in downtown, diagonally across from the XL Center arena, The two structures are now joined internally to create one apartment building.
Original use: department store
Built: 1928
Conversion cost: $30 million, with public funding
# of apartments: 97
Market-rate/Affordable: 100% Market-rate
Developer: Brooklyn, N.Y.-based Shelbourne Global Solutions LLC, of Brooklyn, N.Y.; and Lexington Partners and LAZ Investments, both of Hartford.
Conversion completed: 2023
Current Occupancy: 100%
Why it Matters: The L-shaped building that anchors the southern side of the corner of Pratt and Trumbull streets was long past its heyday. After the Steiger's Department Store closed in 1962, the upper floors became office space. The new apartments formed a cornerstone for the Pratt Street corridor which aspires to be both a place to live and a visitor destination.
Original use: office building
Built: 1981
Conversion cost: $20 million, with public funding
Apartments: 60
Market-rate/Affordable: 70%/30%
Developer: RBH Group, Newark, N.J
Conversion completed: 2019
Current Occupancy: 98%
Why it Matters: Teacher's Village Hartford converted office space facing Bushnell Park that had been vacant for two decades. The vision was to create a residential community for teachers and other educators who can collaborate and support each other in their professional endeavors. While an estimated 40% of the units are occupied by educators, below the initial leasing of 60-70%, the apartments remain nearly fully leased.
SOURCES: Capital Region Development Authority; Courant reporting
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