Four buildings at 131 Commercial Parkway in Branford recently sold for $3.7 million, a deal that was among the shining moments for New Haven County’s commercial real estate market during the first half of this year.
Industrial space and investment property were bright spots in the Greater New Haven area during the first half of 2004, while land was in demand in New London County, according to commercial brokers.
“As far as I’m concerned, it’s the best six months I’ve ever had,” said Bill Clark, senior vice president with The Geenty Group, Realtors, in Branford, a town to the east of New Haven.
Clark specializes in industrial real estate and has seen that take off during the past six months, he said. His biggest problem is the lack of inventory. Office space also has been selling or leasing quickly, he said.
The Geenty Group was involved in several large deals during the first half. In February, the Mauro Motors Co. in North Haven purchased an 86,000-square-foot warehouse distribution building at 80 Defco Park Road for $3.5 million. Clark and coworker Kristin Geenty were the listing agents. Mauro Motors uses about half of the building for storage and for the preparation of new and previously owned vehicles. The original owner, Parcel Port, has leased back the other half of the building.
In addition, Clark represented the sellers of four buildings, totaling about 70,000 square feet, at 131 Commercial Parkway in Branford. The buyer, a Stamford investor, paid about $3.7 million for the property, which was fully leased and included a bowling lane in one of the buildings and three multi-tenanted flex buildings on about eight acres.
Clark also leased an 11,000-square-foot office in Guilford for $1.5 million, he said.
While he completed many more leases and sales in the first half of 2004 than in the last half of 2003, Clark said part of that is because many of the deals that closed this year were started last year.
He attributed the increased business to the demand for investments. Many of his buyers are people who took their money out of the stock market when it became unstable and decided to reinvest in real estate, Clark said.
Clark also has noticed a large demand for small buildings – from 5,000 to 10,000 square feet – and for land, but there is little of either of those in his company’s inventory, he said.
“We could sell land every day if we had it,” he said.
‘About the Same’
Land is also in high demand in New London County, said Ken Bondi of Bondi Commercial in Norwich. The market hasn’t changed much since the last half of 2003, but remains vibrant, Bondi said.
“It’s been about the same,” he said.
Many parts of southeastern Connecticut have more open land than around Hartford and New Haven and in Fairfield County, and Bondi has heard many requests for large parcels that could be subdivided into lots or could be used to build multifamily developments, he said. Most of the open space there is zoned for residential use.
Other segments of the market are not doing as well, Bondi said.
“[There is a] pretty soft demand for office space,” he said.
While there is a lot of office space on the market, businesses are not moving around, he said. Industrial properties are not at a high demand, either.
Retail space, however, is moving quickly if it is in the right spot, Bondi said.
Bondi did not complete any major deals in the first half of 2004 but has four currently under contract. He cannot speak about those yet, he said.
Like New London County, the office market in Greater New Haven has remained pretty much the same over the past year, said John Keogh, senior broker at New Haven-based Traub & Co.
“The market has been relatively unchanged,” he said.
The coastal city’s office market is moving at the same pace it always has: slowly, Keogh said.
“New Haven’s office leasing market is always lethargic,” he said.
Keogh attributed that to the high concentration of attorneys’ offices downtown. New Haven is home to a state and federal courthouse and, therefore, has a high population of lawyers. And because people always need lawyers, leaving attorneys’ practices more immune to fluctuations in the country’s economy than are other businesses, there isn’t as much shrinkage and expansion of those practices, so they rarely need new offices, Keogh said.
“While they’re some growth and shrinkage [depending on the economy] it’s not as sensitive,” he said.
Yale University is also a big factor in New Haven’s office market, Keogh said. The university doesn’t expand quickly, but grows steadily and, along with Yale-New Haven Hospital, leases or buys about 50,000 to 100,000 square feet a year, he said.
The western part of New Haven County, however, saw more activity in the first half of this year than in the last half of 2003, Keogh said
“There’s been a fair amount of activity in the past few months,” he said.
There was a lot of vacant office space in Milford, but a lot of it has been leased, he said. He attributes the improvement to a simple fact.
“The economy is doing better,” he said.
The Milford market is influenced by Fairfield County, Keogh said. Companies that consider moving to towns like Shelton or Trumbull often consider Milford at the same time, he said. Because Fairfield County is home to many financial services, which are sensitive to the overall economy, the economic upturn has prompted some to add jobs they had cut during the economic downturn, Keogh said.
New Haven County has seen little change in industrial real estate, he said. The trend across Connecticut and across much of the country is away from manufacturing and more toward high-tech and distribution companies, he said.
Keogh thinks the commercial real estate market in New Haven County is becoming healthier, he said.
“I think the trend is toward gradual improvement,” he said.
Much of that depends on interest rates, but he doesn’t expect to see cataclysmic growth in rates until after the November election, Keogh said.
Industrial real estate could slow down a bit after the record six months Clark experienced earlier this year, but he is still getting a lot of phone calls about industrial properties, he said.
“There may be a small slowing, but not a lot,” Clark said.
He also has run across many people searching for an investment property, but there are few on the market now, he said.
“I would think anybody in our business should be working right now,” Clark said.
Bondi, however, is less optimistic about the market. He expects the economy to slow down and that it will affect the commercial real estate market, he said. He hopes nothing worse, like a terrorist attack, will happen.
“I’m hoping we don’t get a jolt from some unknown source,” he said.
Bondi also is concerned about the residential market because he sells a lot of land destined for residential development. Although most experts claim the booming housing market isn’t due for a check, Bondi worries they may be wrong.
“I’m worried that the residential market is looking like a bubble,” he said.
Bondi is, however, looking forward to the development of a 470-acre property that used to house the Norwich State Hospital. The state owns the property and will choose a developer for it in about three weeks, Bondi said. He hopes that development could be the beginning of another boom for the area.
Katie Curnutte may be reached at kcurnutte@thewarrengroup.co
