Connecticut's downtowns have, for the most part, seen better days. For decades, growth has been concentrated in the suburbs — particularly Fairfield County, one of the wealthiest areas in the country. But now, New Haven, Hartford and Stamford are trying to lure retailers and residents in hopes of sparking an urban renaissance.
New Haven, for instance, best known as home to Yale University, recently scored a coup when Swedish furniture chain IKEA announced it was opening a 310,000-square-foot store in the Marcel Breuer-designed Armstrong-Pirelli Building at Long Wharf.
About four years ago, Long Wharf was pegged to be a 1.2 million-square-foot upscale mall developed by The Fusco Cos. and New England Development, that would change the city's waterfront. Then, New Haven pulled the plug on the project after a lawsuit by Westfield America, which owned the majority of malls in the surrounding area, and Nordstrom, Long Wharf's major tenant, pulled out because of a corporate reorganization.
John Orrico, managing director of National Realty & Development, says while he couldn't say who was at fault, he thinks the debacle “caused a lot of people to step back and do a reassessment” of doing business in the city.
In the past few years, local officials have refocused on revitalizing downtown. Orrico says his company is starting to see some opportunities in New Haven, thanks to an administration that is now concentrating on what will allow the community to grow. “It's nice to see a proactive government like that working,” he says.
But Ernie DesRochers, senior vice president at Legg Mason Real Estate Services, says if New Haven wants to improve itself, it's going to have to try to emulate Cambridge, Mass., and incorporate Yale into its business community the way Cambridge has incorporated Harvard and MIT.
“They have to figure out how to restore people back into the city, then everything else takes care of itself,” DesRochers says.
People are already coming back, says leasing agent Lou Proto of The Proto Group. He points to The Strouse-Adler girdle factory that was redeveloped into more than 140 upscale apartments, as an example. He says the entire 170,000-square-foot building was leased in fewer than nine months.
Another rehab grabbing attention is the $10 million renovation of the Chapel Square Mall and its 100,000-square-foot office tower. The building's eight floors of office space are already at 100 percent occupancy, but the developers have yet to announce any commitments from the upscale retailers they are hoping to attract for the mall.
And retail property transactions are hot in New Haven, where limited space has national tenant-anchored centers trading at cap rates below 9 percent, according to Joe French, a senior investment advisor with Sperry Van Ness.
FAIR GAME
Fairfield County, which borders New York, has ultra-affluent Greenwich, New Canaan and Darien, making it one of the wealthiest counties in the country (median home price was $288,900 in 2000). “Fairfield County, at least from a retail point of view, is one of the strongest markets in the country, due to the combination of strong demographics and no overbuilding,” DesRochers says. “As such, you have retailers of every shape, size, and color trying to get into the market if they can.”
The barriers to entry have been high for most retailers, especially big boxes, because of high costs and lack of available zoned retail space. When regional discounters Caldor and Bradlees closed their stores, Wal-Mart and Best Buy were able to enter, taking over the empty buildings. Wal-Mart opened two stores in Norwalk, while Best Buy opened one. And in neighboring Stamford, Target is building a new store.
DesRochers also says that Stamford has been able to make itself into a 24/7 city, adding 2,500 residential units, bringing people back downtown, where, he says, there was no one 10 or 15 years ago.
But Fairfield County is not representative of Connecticut as a whole.
Hartford, the state's capital, has been struggling to bring back its city center. Retail vacancies soared in the 1990s as stores moved out to the suburbs. Now, it looks like the city may be shaping up for a comeback.
A project called Adriaen's Landing on the eastern edge of the city's central business district is expected to drive the hoped-for turnaround for the city. At the center of the $770 million project is the 550,000-square-foot Connecticut Convention Center, with an adjacent 22-story, 409-room Marriott hotel.
Capital Properties is the designated developer for the retail and residential parts of Adriaen's Landing. Daniel Matos, principal for Connecticut operations of the New York-based developer, says Phase 1 calls for 150,000 square feet of retail space to be called “Front Street,” 200 luxury apartments and 1,200 parking stalls. The project will also include 20,000 square feet of office space.
He says the concept of Front Street is to create a retail space that has a neighborhood feel with lots of restaurants and specialty boutiques, as opposed to big-box anchors. The biggest floor plan is 25,000 square feet.
A key part of the city's strategy is to increase the downtown residential population, and it's hoping the allure of Front Street and other projects will convince a good chunk of the 100,000 workers that flood the city daily to live closer to work.
“Because of the amount of money [the city] is investing in residential, retailers are starting to take notice,” Matos says, adding that they have enough letters of intent to completely occupy the project right now. He also says his company is negotiating with a large drug chain.
Also downtown, the 11-story former flagship of G. Fox department stores is undergoing a radical redevelopment as a public-private partnership with 100,000 square feet of retail, restaurant, civic and entertainment venues. About 40 percent of the building is the new home to Capital Community College. But few retailers are interested in moving downtown until more affluent residents arrive.
New retail activity isn't limited to downtown, though. According to Finard & Co.'s report for Greater Hartford 2003, total retail space rose by 467,000 square feet, or 1.3 percent, to 36 million square feet. The area's two largest projects were a 118,000-square-foot Home Depot in Bloomfield and an 87,000-square-foot Kohl's in Manchester, according to the study. Grocery stores, including two Stop & Shops, convenience stores, mini-marts at gas stations and two 7-Eleven stores, gained 175,200 square feet, accounting for more net square footage than any other category.
“The grocers have been incredibly active, ramping up store counts aggressively,” says Bill Beckeman, partner with Finard.
Columbia, S.C.-based Edens & Avant's recent acquisition of Konover & Associates' portfolio in the Hartford suburbs has local real estate execs jumping as the developer cherry-picks the best properties, selling some and replacing dark Ames anchors in others with grocery stores, French says.
In West Hartford, another redevelopment project is attracting attention. Developing and consulting firm Street-Works, along with JDA Development, is working with the township of West Hartford to make over a part of that city that was occupied by a couple of vacant car dealerships into a 550,000-square-foot mixed-use development, comprised of 200,000 square feet of retail space, 165,000 square feet of office space and 185,000 square feet of residential space.
Robin Mosle at Street-Works says the development also includes a new board of education building and a revamping of the library. She says having the project supported by local officials has been beneficial, but not because it has helped clear New England's tough hurdles. She says the partnership ensures that the community gets what it needs.
“It's something that should be done in all communities,” says Mosle.
— With Beth Mattson-Teig
How does Connecticut compare to other New England states? See page 54.
Market Profile/Connecticut
DEMOGRAPHIC OVERVIEW
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Population 2002: 3.46 million
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Median Household Income 2002: $53,347 (+6.3% YOY)
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Median Home Price 2002: $219,000 (+12.7% YOY)
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Unemployment Rate December 2002: 4.6%
Source: economy.com
HARTFORD
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Population 2002: 1.16 million (Hartford and Middlesex counties)
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Median Household Income: $46,545 (+8.8% YOY)
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Median Home Price 2002: $186,000 (+7.9% YOY)
NEW HAVEN
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Population 2002: 1.7 million (New Haven and Fairfield counties)
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Median Household Income: $56,275 (+9% YOY)
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Median Home Price 2002: $205,000 (+17.4% YOY)