The rapid evolution of e-commerce — including the relationships between the companies that manufacture product and the e-tailers that distribute and sell that product — is arguably the most significant factor impacting the Philadelphia-area and larger regional industrial real estate market today. And for those of us following this phenomenon closely, it feels like we may just be in the second inning of a nine-inning game at Citizens Bank Park. Simply put, e-commerce is creating strong industrial demand. A number of new companies are popping up on the radar, particularly along Pennsylvania’s I-81/I-78 distribution corridor. In the fourth quarter, Walmart’s 1.2 million-square-foot lease at a Liberty Property Trust asset in Bethlehem announced a new neighbor — Walmart again! Adjacent to Liberty’s building will be an additional 1 million square feet to be occupied by Walmart and the space is being developed by Majestic specifically for e-commerce. Earlier in 2013, One Kings Lane leased 500,000 square feet from DCT Industrial in Kutztown. Amazon now has a 4.8 million-square-foot footprint in Pennsylvania with constant threats of additional growth. The list goes on. These sizable transactions drove leasing volume up to nearly 9.7 million square feet at the end of the third quarter …
Connecticut
Low vacancy persists in the Fairfield and New Haven county apartment sector behind respectable job growth and the accompanying creation of new rental households. Multifamily rentals also continue to derive support from the region’s pricey single-family home market. In New Haven County, rentals remain the most cost-effective housing option for many households and younger residents. An acutely low level of single-family home affordability also exists in the most sought-after neighborhoods in Fairfield County, driving many residents to apartments for extended tenures. With high single-family prices posing a barrier to homeownership for many households and creating a large pool of renters, multifamily developers are ramping up production, especially in Fairfield County. Thus far, new construction has been rather well received. Vacancy in recently built properties in Stamford/Norwalk was up slightly to the mid-3 percent range this year as complexes coming online stabilized, despite average rents in excess of $2,500 per month. Tight vacancy also persists in lower-priced 1990s-era rentals in the submarket. By the end of 2013, employers in the market are projected to create 11,500 jobs, marking a 1.5 percent expansion of payrolls. Gains in education and health services, and professional and business services primarily accounted for an increase of …
The best word to describe the current retail real estate market in Connecticut is “stabilized.” The majority of the big box and junior anchor vacancies resulting from downsizing and bankruptcies have been absorbed. Although rental rates are still not at pre-recession levels, new construction — which has been absent over the last few years — is now being seen with multiple projects throughout the state. In Brookfield, Samuels & Associates recently completed a redevelopment of an existing 40-year-old shopping center on Federal Road by demolishing the majority of the existing shopping center adjacent to a freestanding Kohl’s and constructing a BJ’s Wholesale Club along with several restaurant pads. The project will also debut the first Chick-fil-A in Connecticut. Walmart Neighborhood Market has opened its first two Connecticut locations. The first opened at Edens redevelopment of the Bishops Corner West shopping center in West Hartford followed by the opening of a freestanding store in a former Shaw’s Supermarket on Route 6 in Bristol. Walmart has also opened a new Walmart Supercenter on Route 5 in East Windsor that is a relocation of an older Walmart on the opposite side of Route 5. Also, Walmart will soon open a new freestanding supercenter …
If only the economy would cooperate, there are signs of improvement in the downtown and suburban Hartford office market. Modest expansion and non-traditional absorption of office buildings is beginning to create shortages of large blocks of office space in certain areas. Places like West Hartford Center, Glastonbury’s Somerset Square area, Corporate Ridge in Rocky Hill, downtown Middletown and downtown Hartford have all seen their best Class A buildings’ occupancy levels grow. Vacancy is being concentrated in buildings that suffer from either age-related challenges, capital issues or buildings that are in an ownership transition. Unfortunately, although the governor and legislature have taken some positive steps to create economic activity, the state is still mired in a high-tax, high-cost model that is eroding or tempering growth from many of our largest employers and keeping new businesses from entering the market. In spite of that self-inflicted condition, here are the trends that are currently shaping the current office market in Hartford County: Non-traditional absorption: real estate demand for educational, multi-family residential, medical and government facilities is booming compared to corporate office needs. Offices buildings are being taken out of inventory for conversions to schools, apartments, medical offices and state offices. While some of …
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 …
Multifamily markets around the country are thriving and Connecticut is no exception, particularly with regard to Class B and Class C properties. The regional mortgage markets have opened up dramatically, approving deals that would have been snubbed a year ago as the market rebounded from the economic downturn. Today, the multifamily sector is alive and well in all classes and markets throughout Connecticut. When the rebound first began roughly 18 months ago, premium core properties were getting all the attention because of discretionary equity and debt. Lending agencies at the time showed a strong preference for garden-variety Class A suburban and high-rise assets. Terms like “value-add” were barely in their vocabulary then, but now closings labeled as such occur all the time. Outside of the New Haven, Fairfield and Stamford core markets, however, plenty of REO and distressed real estate is still working its way through the pipeline, from markets like urban Hartford to outlying suburban areas. Why the delay? For a long time, investors felt repercussions from the market crash, so we had a case of “a falling tide sinking all boats.” Now, while there’s still no urgency to invest in bank-owned real estate, these assets are slowly but …
Blessed by location and good 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 (around 6.5 percent). 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 …
In the last nine months, we’ve seen a re-energized national retailer base in the Connecticut market that’s seeking new opportunities and absorbing prime retail space. The national retailers never completely disappeared; however, from late 2008 through the spring of 2011 there was little momentum from this sector. This newfound activity has served to restore the confidence of both the landlord and the local retailer base, effectively stabilizing rents and reducing vacancy rates in prime retail corridors. There was a great deal of talk about the “flight to quality” during the economic downturn and that trend continues. We are seeing especially enlivened activity in the upscale retail main streets in Connecticut including Greenwich Avenue in Greenwich, Main Street in Westport and Elm Street in New Canaan. This is not only a local trend, but a global one, as rental rates on high street retail corridors around the globe experienced a 4.8 percent increase year-over-year and luxury goods have made a strong comeback with year-over-year growth of 8.5 percent for the 12 months ending in August 2011. This trailed only the wholesale clubs segment in terms of overall performance. U.S. luxury retailers are also the beneficiaries of a weak U.S. dollar that …
In the central Connecticut market, owner/users are beginning to seek fair priced industrial facilities that can be financed by mostly local community banks using SBA and some conventional loans. Also we are seeing companies come up from Fairfield County (Bridgeport and Stamford) to take advantage of Waterbury Development Corp. loans and some forgivable grants. One 35,000-square-foot user put up their equipment as collateral to obtain a $500,000 loan for modern space where they could become more productive at a much lower cost of occupancy and expand their workforce. One landlord is buying large vacant industrial facilities at $20 per square foot and rehabbing and subdividing for re-lease programs. We are also seeing some new construction and facility expansions in industrial parks that offer Enterprise zone incentives. Municipal and state Department of Economic and Community Development incentives are driving transactions. These incentives include the Urban Jobs program, Enterprise Zones and Corridors, SBA 504 loans, and tax abatements and other enhancements. Waterbury has four industrial parks and at least five business parks surrounding the city, including Watertown, Plymouth, Naugatuck, Cheshire, Oxford and others. The city of Waterbury offers many perks, and the others offer lower taxes and suburbia. The Naugatuck Industrial Park …
Restrained development, an unsettled single-family housing market, and growing rental housing demand are driving a robust turnaround in the Hartford multifamily sector, making the market one of the strongest in the country. Vacancy will fall to less than 3 percent in 2012, enabling property owners to raise rents significantly. Some of the greatest gains will likely occur in the North/West Hartford and South Hartford/North Middlesex submarkets, where vacancy rates are less than 3 percent. Overall, vacancy and rents have likely improved sufficiently to justify construction, and many planned projects may accelerate through the pipeline in the quarters ahead. The track record of recently delivered projects will likely embolden developers. For example, in the North/West Hartford submarket, vacancy fell 60 basis points last year after a 264-unit complex came online. The multifamily sector is also getting a lift from the still-struggling single-family housing market, where sales volume fell 20 percent last year. Mortgages remain hard to obtain, and many would-be homebuyers will remain in rentals for an extended period as a result. The Hartford market continues to attract attention from investors, perhaps to a greater extent than other markets of similar size. A slight decline in transaction velocity over the past …