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May 22, 2019

Report: Stable retail outlook for region

By Michael C. Bingham

The real estate firm of Marcus & Millichap has released its second-quarter retail report for its southern Connecticut market (New Haven and Fairfield counties). The report reflects employment, construction, real estate and sales trends for the 12-month period ending March 31, 2019.

Although contiguous, the two counties reflect different market realities, particularly with regard to household incomes and real estate values.

Taken as a single entity, employers for the region added 2,200 jobs during the 12-month period. Reflecting continued commercial and residential development, particularly in Fairfield County, employment in the construction sector grew by 8.3 percent.

M&M’s employment outlook for the next 12 months reflects the market’s proximity to major metro areas and a major university, which appeals to companies seeking talented labor at a lower cost than New York and Boston. It projects the creation of 4,000 jobs over the year to come.

In the construction sector, the pace of development has remained largely unchanged as some 352,200 square feet of space came online. Fairfield County construction was led by the delivery of a 413,000-square-foot Home Depot in Stamford and a 44,000-square-foot multi-tenant building in Shelton.

M&M projects renewed growth during the balance of 2019, paced by the SoNo Collection luxury mall schedule to come online in South Norwalk later this year.

Commercial rents advance

In commercial real estate, the market’s vacancy rate dipped slightly over the past year to 4.2 percent in March. Rent growth has been more pronounced in the multi-tenant sector as average asking rates advanced 1.7 percent, compared with 0.4 percent for single-tenant properties.

M&M notes that 2019 commercial completions will reach a three-year peak, albeit based substantially on a single delivery (the SoNo mall). Overall its report projects that rents will advance at a pace similar to last year.

Commercial real estate sales trends are rising, according to the Marcus & Millichap report, particularly among single-tenant properties. The average sale price for the combined market rose to roughly $409 per square foot for the 12-month period.

The report observed that lack of upward pressure to interest rates and steady cap rates may encourage transaction activity in the coming months as some owners test the market among continuing price appreciation.

Contact Michael C. Bingham at mbingham@newhavenbiz.com

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