305
Blessed by a favorable location and high quality of life standards, the Danbury, Conn., retail market has grown in the recent 18 months and should continue to expand in 2013. Key among growth indicators are:
* Whole Foods is opening its first store in the Danbury market in 2013.
* Panera Bread and Petco recently opened second stores in this market.
* Toll Brothers is under way with a new 1,200-home community in anticipation of regional population growth and changing demographics.
* Danbury has the lowest unemployment rate in the state (7.1 percent seasonally unadjusted as of January 2013, according to the Bureau of Labor Statistics).
Location and Demographics
Danbury is located in northern Fairfield County on the border of New York State and is approximately 50 miles north of New York City. (The Metro train to NYC takes just over an hour.) The population is approximately 80,000. Danbury serves Fairfield and Litchfield County in Connecticut as well as Westchester, Putnam and Dutchess counties in New York. Stamford, Conn.; White Plains, N.Y.; and Hartford, Conn., are each about an hour away. The relatively short commutes to these larger urban hubs entice real estate occupiers for office space and retail tenants with lower rental costs — on average, 20 to 25 percent less for comparable space because the cost of living is lower in Danbury.
For these reasons, Danbury has historically drawn major industries like pharmaceutical and semiconductor companies that help Danbury stay competitive with surrounding cities such as White Plains, Stamford and Hartford. Some of the biggest employers in the area include General Electric, Pitney Bowes, Cartus and pharmaceutical company Boehringer Ingelheim.
In addition, Fairfield County is known for good schools and Danbury is home to Western Connecticut State University, with about 8,000 students.
Danbury is one of the major retail hubs in the tri-state area and contributes more in retail sales taxes than any other city in the state.
Growing Demand
There is current demand for investors for both multifamily (rental) projects and for-sale townhome development projects. On the west side of Danbury, which borders New York, Toll Brothers is under way with a project that is planned to create 1,200 new homes over the next few years. Named Rivington by Toll Brothers, the community will be comprised of townhomes, condominiums and age-restricted residences with a 15,000-square-foot community clubhouse, swimming pools, fitness center, all-weather sports court and a bocce court.
Another major new project will have 400-plus apartment units. This has created demand for regional and national restaurant operators. Within the last year, restaurants such as Brio Grill, The Cheesecake Factory and now Chipotle have entered the market. Along with the restaurant operators, the demand for grocery-anchored tenants has attracted Whole Foods to the area. The company should open its first store in early 2013.
Whole Foods Market has leased approximately half of a new 73,000-square-foot center, The Shops at Marcus Dairy on Sugar Hollow Road, and joins Panera Bread, Petco and Eastern Mountain Sports as tenants there. The Shops parallel the Danbury Fair Mall, which is the largest shopping center in the region with 1.3 million square feet. Asking starting rents at The Shops are $50 per square foot, triple net.
New developments, like The Shops at Marcus Dairy, are a positive sign that we are transitioning from filling in existing space to building retail projects again.
BJ’s Wholesale has entered the market on Federal Road, which is already home to Costco. With both discount retailers in the market now, there will be close to 300,000 square feet of wholesale stores serving the region (including New York). Federal Road is one of the three major retail corridors in Danbury and a mix of other retailers absorbed close to 80,000 square feet in the second half of 2012 there (in addition to BJ’s).
Further, Kohl’s and HomeGoods recently announced plans to open second locations within the Danbury market. The two retailers will be anchor tenants in Litchfield Crossings, the largest retail center in New Milford, Conn., with 282,000 square feet on a 42-acre site that will also have some industrial development in the future. The center is being built by Danbury Road Developers and should open by mid-2013.
Data Points
Retail property rents are averaging near $22 per square foot for the metro Danbury area and Fairfield County, according to LoopNet, versus the peak of the market around the beginning of 2008, when average rents were closer to $28 per square foot. By comparison, average retail rents for all of Connecticut are running close to $14 per square foot. LoopNet reports that Fairfield County retail property sales have trended downward to approximately $70 per square foot, on average, compared to nearly $100 per square foot in mid-2010.
The overall vacancy rate for Fairfield County retail property is approximately 4 percent, according to REIS Inc.
— Garett Palmer, broker associate with Goodfellow Ashmore/CORFAC International