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Silicon Harbor Stamford office complex awaits transformation

Commercial Real Estate For Lease Stamford CT / News  / Silicon Harbor Stamford office complex awaits transformation

Silicon Harbor Stamford office complex awaits transformation

The sand-colored colossus stands quietly in the South End next to Kosciuszko Park.

It looks out on the bustle of the restaurant row and chain of apartment buildings in the Harbor Point development a few blocks away, but few visitors venture to the columned edifice at 1 Elmcroft Road. Only a few cars take up spaces in its parking garage.

Two years after Harbor Point developer Building and Land Technology bought the approximately 470,000-square-foot office complex that was technology firm Pitney Bowes’ headquarters, the building known as Silicon Harbor sits nearly empty. As the second-largest office vacancy in the city, it has yet to fulfill BLT’s vision of becoming a technology hub. But in a sluggish leasing market neither BLT officials nor real estate experts are particularly surprised nor worried about its predicament.

“I’m sure the owners would have liked to have leased it sooner, but you have to get your arms around repositioning it, re-tenanting it and going in the right direction with it,” said James Ritman, Stamford-based executive vice president of commercial real estate firm Newmark Knight Frank. “The whole program is relatively new.”

Becoming Silicon Harbor

BLT acquired the building in July 2015 for $38.5 million, after Pitney Bowes had moved its headquarters to a smaller base at 3001 Summer St. Pitney had been based at 1 Elmcroft from 1986 to 2014.

The Stamford-based BLT already ranked as a dominant developer in the city and the largest in the South End. Since building work began in 2009 on its mixed-use Harbor Point, BLT has constructed more than 2,300 apartments there and a busy corridor of restaurants and stores. It plans to build another 2,400 units as part of the waterfront project.

It also owns three other office buildings in the South End at 333 Ludlow St., 2200 Atlantic St. and 100 Washington Blvd.

“The reason we bought the building was because knew it was a great, high-quality asset,” Ted Ferrarone, BLT’s chief operating officer, said in an interview last week. “Historically it has been a little isolated. But as we build out more of Harbor Point, we think it would ultimately become more central and attached to all of the development.”

With the purchase of the I.M. Pei & Partners-designed building, BLT would take on its second vacant property that formerly housed a major corporation. It acquired in 2012 a nearly 600,000-square-foot downtown complex, soon to be known as the BLT Financial Centre — which had served as the headquarters for reinsurer Gen Re before its move about seven years ago to Long Ridge Road.

“This was a smart buy at the right time at an incredibly low-basis number,” said Christian Bangert, executive vice president of Stamford commercial real estate firm Rhys, speaking of the Pitney Bowes building. “This was a way for them to get another huge asset in the South End. It was a strategic play. They have plenty of time and resources.”

BLT renamed the building Silicon Harbor, a nod to Silicon Valley that epitomized its goal of attracting technology firms. It would also make a number of improvements, including taking out some interior walls to take advantage of the building’s large floor plates.

“Our transformation of this phenomenal property into Silicon Harbor is a response to the drivers of demand in today’s office market,” Carl Kuehner III, BLT’s CEO, said in January 2016. “Technology and creative tenants are driving office space absorption nationwide, and if we want Stamford and Fairfield County to benefit from that trend we need to offer the space they want.”

Such firms continue to build their presence in the city. Job-search giant Indeed announced last month it would add 500 jobs in the coming years. The sector’s growth has not yet translated into tenants at Silicon Harbor – only BLT’s own offices are now based there — but a number of local leaders think it has the potential to attract such occupants.

“It needs some kind of entrepreneurial ecosystem to get it going,” said Janis Collins, co-founder of the Westport-based business accelerator program The Refinery. “Those startups would generate jobs and revenue from people who would work there, eat there and live around there.”

Leasing prospects

Like other landlords, BLT grapples with a leasing market that still has not fully recovered from the last recession. Citywide vacancy rates are running at more than 25 percent, according to a number of real-estate firms’ latest counts.

“I’m not surprised it’s still vacant,” Bangert said. “It’s a very big building. A lot of prospective tenants want to see other businesses in the building. They might be skeptical or wary of being the first into it.”

The progress of the BLT Financial Centre, which now operates about half-full, offers a reference point for Silicon Harbor. Professional-services firm Deloitte moved into about 120,000 square feet in November 2014. This summer has brought the two latest arrivals: Consumer-goods firm Henkel moved its North American headquarters into about 155,000 square feet, while professional-services firm RSM took about 29,000 square feet.

Silicon Harbor’s predicament also parallels that of 677 Washington Blvd., an approximately 700,000-square-foot complex that stands as the city’s largest vacant office property. It formerly housed the Stamford operations of banking giant UBS, which last year moved across the street into a smaller setup at 600 Washington Blvd.

“I think Silicon Harbor and 677 Washington are competitive in the sense that they both have large blocks of space, but the buildings are very different,” Ritman said. “677 Washington is a more traditional office building and might attract a more traditional office user. Silicon Harbor offers more of an environment that younger, growing tech companies would imagine as their workplace.”

BLT officials said they remain confident they can attract tenants, although they have not set deadlines.

“There’s no way to say what would be the hard timing; we’re just looking for the right tenants,” Ferrarone said. “We’re a long-term property holder in Stamford, including the South End with Harbor Point. We’re committed.”