NORTHEAST SNAPSHOT, MAY 2007
New Haven, Connecticut Retail Market
Current trends in New Haven include mixed-use developments in the downtown area and along the waterfront. The expansion of the residential population in downtown New Haven is generating increased retail tenant demand, higher occupancy rates and ongoing revitalization efforts in the New Haven metro area, which should allow owners to realize greater rent growth in 2007 than in recent years. In addition, there is continued development in existing retail corridors along Route 80, Foxon Boulevard and Whalley Avenue that include core and big-box retailers. Along Route 80 and Whalley Avenue, the outer retail corridors, retailers are repositioning existing assets to accommodate the land constraints and high barriers to entry. The Walgreens located on Whalley Avenue is in the permitting process to redevelop an existing store to accommodate the new proto-typical store that incorporates a drive-through window. On Foxon Boulevard, a proposed 70,000-square-foot, multi-tenant shopping center situated on 8.6 acres is moving through the approval process with rents projected at $18 per square foot.
The Ninth Square project, a mixed-use development comprised of retail and residential units is in the process of completing the retail lease-up. On College and George streets, another mixed-use project is in the pipeline. It will include 220+/- residential units with 50,000+/- square feet of retail set on 2.5 acres. The Shartenberg site, a 1.5-acre lot on Chapel and State streets in New Haven, is also currently under development. The City of New Haven has selected Becker & Becker as the developer for the mixed-use project. The original proposal is for 420 residential units and first floor retail. There has been some discussion to incorporate a downtown supermarket on the site. The Coliseum Site, which is situated on 6 acres, is looking to incorporate the Long Wharf Theater on 2 acres with the balance being a dense, mixed-use site with first-floor retail and office and residential space on the upper floors. This project will also include new parking facilities and a potential hotel convention center.
There are several retailers new to the New Haven area, including Carmax Auto Superstore, which delivered a 20,000-square-foot store on Frontage Road in January 2007, and IKEA, which is to date, the largest retailer to hit the New Haven market. IKEA opened a 300,000-square-foot retail outlet at the end of 2004 in Long Wharf on the former Pirelli site located on Sargeant Drive, which runs along I-95 N/S.
Retail rents are trending upward due to the increase in multi-residential development in greater New Haven. Yale University and New Haven’s niche shopping, restaurant and entertainment venues continue to draw residents to the downtown area. The highest rents, $25 to $45 per square foot, are in the Central Business District (CBD) as well as along Chapel, Broadway, Whitney and Grove Streets. Retail vacancy rates in New Haven continue to average 10 percent with shopping centers averaging 7 percent. Gross rents range from $15 to $35 per square foot with an average of $15.92 per square foot. Triple net rents range from $10.50 to $30 per square foot with an average of $19.50 triple net lease. The average rental rate for shopping centers is $13.16 triple net lease. Asking and effective rents are forecasted to increase by 3.2 percent in 2007.
Future development continues to be in the works in the Long Wharf area due in large part to waterfront views and I-95 accessibility. The city is in the planning stages for redevelopment of the overall area, a concept plan that will incorporate a mixed-use venue tying the waterfront to downtown New Haven. Another hot spot for future development is the Lily Pond area of New Haven, which could continue the Whalley Avenue retail corridor through to the Merrit Parkway and the Southern Connecticut State University campus and into the suburban housing market.
As the Route 34 corridor continues to expand with the new Cancer Center being developed by Yale, moving forward, discussions have begun for hotels and mixed-use projects along this up and coming area. The concept plan calls for a 1.1 million-square-foot development with a mix of residential, retail and commercial space as well as bio-medical uses such as the existing Pfizer Clinical Research facility, which opened in 2004.
As far as long-term development is concerned, the crossroads of Route 10 and the Ella Grasso Boulevard through to Route 1 is showing promising potential for future retail development. The continued residential growth in the New Haven CBD will attract further investment in existing retail properties as well as assets that can be repositioned for retail use.
— L.A. Drinkwater, CCIM, Seth J. Richard, and Steven J. Siegel, director, are all part of the National Retail Group of Marcus & Millichap Real Estate Investment Services
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