Connecticut real estate

Small Office Space for Hybrid-Work a New Hot Trend in Connecticut Real Estate

Realtors say businesses are looking for spaces where employees can hold meetings or work occasionally as they return to hybrid schedules

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Due to the pandemic, Connecticut’s real estate market has been booming, and now there is yet another hot commodity: small office spaces.

Connecticut realtors say businesses are looking for spaces where people can hold meetings or work occasionally as more employees return to hybrid schedules.

“We've seen that people are looking to have an office experience up here without having to commute to the city five days a week, and that's put a big crunch on our commercial office space,” Susan Isaak, Houlihan Lawrence Real Estate agent, said.

Homes and offices have become synonymous over the past two years.

"This goes back to the pandemic, the trend where people were leaving the city and moving really all over Connecticut,” Isaak said.

Now, hybrid schedules are the new norm.

“While they still have this home office space, they've recognized that they may not want to be home all day,” Kim Galton, Houlihan Lawrence commercial group director of retail, said.

For the throngs of employees who left behind the daily commute to New York and moved further into Connecticut, employers are looking for a new option.

“Satellite office space is in higher demand,” Galton said.

“It’s definitely a hot commodity,” Isaak said. “Just like the housing market, there is a high demand and low inventory for a very particular kind of space."

The realtors say what companies are looking for is called Class A office space. These spaces are typically 3,000 to 5,000 square feet to accommodate smaller groups.

They're leasing for $80 per square- foot and upwards. Many owners are asking for a lease term of five years or more because demand is skyrocketing.

“There is also not a lot of new construction going on,” Galton said. “That means that people who have the inventory are holding on to it and renewing their leases. The sublease market for office space is also pretty hot."

Galton said demand for Class A office space increased exponentially just outside of New York in Fairfield County. In the past year, the vacancy rate in Greenwich fell to 7%, which is well below the 10-year average, according to a Co-Star report.

“A lot of companies that are based in Manhattan, do want that luxe address of Greenwich, Connecticut,” she said. “Proximity to the train station into the city is important.”

However, Isaak adds that she sees the trend trickling across the state.

“I believe that demand has spread throughout Connecticut because the workforce has spread into Connecticut,” Isaak said. “It just didn't matter how long it took to get to the city because it wasn't going to be a daily occurrence for them any longer. So they could keep on pushing out of the city to an hour, hour-and-a-half, two hours away.”

They say companies are realizing with satellite offices, they can hire and grow within Connecticut, another change driven by the pandemic the realtors believe is here to stay.

“Companies have realized that they don't need all their associates to come into a Manhattan-based office every day of the week,” Galton said. “ This allows them to continue the momentum of the business with the secondary office space."

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