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December 19, 2022 Editor’s Take

Bordonaro: The good, bad and uncertainty of 2022

Greg Bordonaro
By Greg Bordonaro

As we head into the final days of 2022, it’s a good time to reflect on a year that brought much uncertainty.

While many of us returned to pre-pandemic routines and ways of life, economic headwinds — caused by supply chain disruptions, inflation, rising interest rates and workforce shortages — caused many Greater Hartford business leaders sleepless nights.

Here’s a look back on the good, bad and uncertainty from a busy 2022.

The Good

Connecticut hasn’t been known as a fiscally stable state, but it is right now, thanks to an influx of federal COVID-relief funds and a stock market that performed well throughout most of the pandemic.

The state reported a $4.3-billion surplus in fiscal 2021 and currently has a $3.3-billion rainy day fund.

By the end of this year, the state will have also paid down over $5 billion in long-term pension debt. Connecticut is on pace for another 10-figure surplus in the current fiscal year.

Wall Street has looked fondly on the state’s newfound fiscal stability. Standard & Poor’s in November increased Connecticut’s general obligation bond credit rating, following similar moves made in 2021 by Moody’s, Fitch and Kroll.

The Lamont administration and legislature this year also approved $600 million in tax cuts.

Additional tax cuts are on the table in 2023, including a middle class income tax cut and the possible sunset of the corporation business tax surcharge.

The Bad

The pandemic’s impact on Greater Hartford’s office market came into sharp focus this year. And the picture hasn’t been pretty.

Key Hartford employers announced major downsizing plans:

  • Prudential Financial will vacate space at 280 Trumbull St. in Hartford, shrinking its downtown presence from 250,000 to 25,000 square feet.
  • Robinson+Cole agreed to lease 75,000 square feet at One State St. in Hartford, vacating 120,000 square feet at 280 Trumbull St., its longtime home.
  • UnitedHealthcare is shrinking its footprint in City Place I from 350,000 square feet to 50,000 square feet.
  • Stanley Black & Decker shuttered its 23,000-square-foot advanced manufacturing innovation center at One Constitution Plaza and put the space on the market for sublease.

These moves made it clear the pandemic will have a meaningful, lasting impact on the office market as employers continue to embrace remote and hybrid work models.

It’s also confirmation that pre-pandemic workweek foot traffic won’t be returning any time soon. With more downsizing still in the offing, some real estate experts predict downtown Hartford’s office vacancy rate will be in the 30%-range, possibly reaching historic highs.

The big question has been, where does Hartford go from here?

Part of the answer is already in motion as city planners, boosters and developers try to recast Hartford as less of a business district and more of a residential neighborhood.

Over the last decade, Hartford has developed a stronger residential base by adding more than 2,000 new apartment units, with thousands more set to be built in the years ahead.

Demand for those units has been strong with occupancy rates above 90%.

The latest to debut were Randy Salvatore’s 270-unit “The Pennant” apartments — part of the broader North Crossing development — and the 97 rental units at 99 Pratt St.

Shifting Hartford into more of a residential neighborhood is a sound strategy and the city should continue to add apartments as long as demand keeps pace.

However, Hartford still needs a strategy to lure new businesses downtown.

The Uncertainty

While Connecticut has been able to achieve fiscal stability, the state’s overall economic performance has been inconsistent, even weak. Heading into 2023, there is uncertainty about where the U.S. and Connecticut economies are headed.

Some are predicting a recession, though not a severe one. Others are more optimistic the economy won’t have much of a slow down.

In 2022, Connecticut’s economy continued to trail the nation’s. As of October, Connecticut had only recovered 89.4% of the 289,400 jobs lost during March and April 2020, when the pandemic temporarily shut down significant parts of the state’s economy. The U.S. economy fully recovered pandemic-related job losses in July.

And the workforce shortage continues to plague myriad industries. There are over 100,000 job openings in the state, and even if Connecticut had 0% unemployment, there would still be 33,000 unfilled jobs, according to Connecticut Business & Industry Association CEO Chris DiPentima, a sign that a decade-long population out-migration trend has limited our growth prospects.

Meantime, Connecticut’s second quarter GDP shrunk by 4.7%, the second worst decline in the nation, according to the U.S. Bureau of Economic Analysis. Conversely, the state’s first quarter GDP grew 5.5%, one of the strongest growth rates in the country.

High costs of doing business and living, high taxes and lack of affordable housing are all determinants to growth that have certainly impacted the state’s slower recovery.

Those are all areas state policymakers should look to address in the new year. 

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