This CT city has a 37% office vacancy rate, delays in building inspections, lacks homeownership

The city’s office vacancy rate is at a 35-year high.

Hartford’s newly minted mayor, Arunan Arulampalam, assumes the helm of a city trying — with some success — to recapture the momentum of revitalization that was on a roll before the pandemic.

But along with high interest rates that still make financing tough, a supply chain that is hardly back to normal, and pricey construction materials, there is something else tempering redevelopment: the slow pace of city construction permitting and inspections.

Developers and business owners have complained privately for months about the problem. The debut of the $29 million renovation of the downtown’s aging Hilton Hartford hotel — now planned for March — was delayed almost a year, partly because of the issue.

“It is something that I’ve heard from so many businesses, and it is something that we are really focused on as a priority in our early days,” Arulampalam said.

Arulampalam’s comments came during a wide-ranging interview with the Courant on development in Hartford that also touched on everything from neighborhood development and housing to office vacancies downtown, which have reached a stunning 35-year high in the aftermath of the pandemic.

Thin staffing at City’s Hall’s building department has led to backlogs in securing permits and scheduling electrical, plumbing and other inspections that are crucial to moving projects ahead.

Five years ago, there were six Hartford employees performing these kinds of inspections and now there are three, according to the city. But the city hopes to add five more inspectors to bring the total to eight allowed for in the most recent municipal budget.

A year ago, Arulampalam’s predecessor, Luke Bronin, acknowledged the delays but also pointed out that demand for permits and inspections “and work for that team to do (is greater than at any point in recent memory.” Bronin said the inspectors were moving as quickly as they could to work through projects.

Arulampalam said the building department has struggled to retain inspectors, partly because competing municipalities could offer higher pay.

The starting inspector salary is now $87,205.72.

“Mayor Bronin was able to increase the salaries for inspectors, which I think will make it a lot easier for the city to recruit them, and, more importantly retain new inspectors,” Arulampalam said, “It’s an operational challenge that we’ve already begun working on.”

Gains in the neighborhoods

As Arulampalam takes over a mayor, more than 3,000 apartments have been added in and around the downtown area in the past decade. The city’s Hart Lift storefront revitalization program is helping dozens of new businesses open — many of them restaurants and bars — both downtown and in neighborhoods.

“The first step was to make sure we could reactivate our downtown,” Arulampalam said. “We’ve got people living downtown. I think if it weren’t for the pandemic, we’d be seeing a lot more people spending time downtown, going out to eat downtown, and that’s coming back, I think, recently.”

While building a strong core for the city is critical, it also is essential for those gains also to take root in the neighborhoods. Arulampalam’s strategy is similar to Bronin’s: foster strong commercial corridors, such as Albany Avenue, to promote an economic development foundation with housing built on that base.

“I think what I have an opportunity to do in the four years ahead — and hopefully more than four years — is to bring a lot of that progress into the neighborhoods,” Arulampalam said.

Arulampalam sees a priority in increasing homeownership in Hartford neighborhoods, as rents are increasingly pricing out residents who have lived in the city for years, if not generations.

Arulampalam owns a home in the city’s Frog Hollow neighborhood, where homeownership rate is a dismal 7%.

“So a lot of my neighbors who are struggling to get by are paying more in rent than I am paying in my mortgage,” Arulampalam said, “in a house in which five kids and a dog can live very comfortably. We haven’t created those pathways for Hartford residents to own the places where they live.”

There are also barriers, Arulampalam said, to creating a steady, middle-class in many neighborhoods.

In Frog Hollow, Arulampalam estimates that at least half of the housing units are deed restricted as affordable housing.

“That sort of a landscape makes it really difficult to create a vision for building middle-class families in the city,” Arulampalam said. “If you moved into certain apartments in my neighborhood and got a job and worked your way into middle management, you would have to leave.”

“It makes it really difficult to envision a future in which the families that live there now could build middle class lives and stay in that community,” Arulampalam said.

Downtown office vacancies

While Arulampalam sets a focus on the neighborhoods, it is likely downtown office vacancies will still command a lot of his attention.

In 2023, downtown Hartford saw office vacancies the highest since the devastating downturn of the late 1980s, coming in at about 33%, according to commercial real estate services firm CBRE.

Last year marked the third straight year in which office tenants shed more space than they leased, John M. McCormick Jr., executive vice president at CBRE in Hartford, said.

McCormick said it is expected vacancies will rise to 37% this year, again with more space given up than taken.

The downsizing of office leases — seen not only in Hartford but across the country — come as pandemic-era working from home, either full- or part-time becomes part of the national economic culture.

Even so, CBRE said there is a bright spot: Hartford saw a 10th straight year of relocations from the surrounding suburbs, with expansions and relocations downtown.

Arulampalam said office vacancies downtown is the biggest challenge facing Hartford. The office towers contribute mightily to the city’s property tax coffers and have long contributed to work week vibrancy and patronage at restaurants, bars and other businesses.

The pandemic showed how dependent downtown is on its offices, despite the addition of apartments since 2013. Bronin called for even more: 5,000 in the coming years.

Arulampalam said his administration already is talking to landlords, potential tenants and business recruitment partners in the community.

“We are talking about potential alternative, creative uses of that space,” Arulampalam said. “We are throwing everything we can at it to try to get that space built. It’s really important. It’s a priority for the city.”

Kenneth R. Gosselin can be reached at kgosselin@courant.com.