Prudential Connecticut Commercial Real Estate brokered the sale of this mixed-use property at 33 East Ave. in New Canaan last May. It was purchased for about $2 million.

A slowdown in property sales has dropped the retail sector to the bottom of the list when it comes to major commercial real estate investment property across the country, but that national trend is not necessarily being reflected in Connecticut, according to area brokers.

“Retail in our market – specifically Connecticut – has been relatively unaffected by the perceived slowdown in the rest of the country,” said Patrick Smith, a principal at Staubach Retail in New York City, which does business across Connecticut and works with companies like Whole Foods and Wal-Mart.

“I think the market is still very strong,” Smith said. “There’s a lot of pent-up demand.”

The level of retail investment is slightly off the mark from last year, said Chris Angelone, senior vice president and partner at CB Richard Ellis in Boston. The retail market is more consistent with the market in 2004, he said. The drop-off from last year is mostly due to the fact that there is a lack of quality product on the market.

“Connecticut in general Â… is a preferred area for institutional investment,” Angelone said.

Pricing on Class A buildings remains aggressive, and the properties have been popular.

“The appetite investors have for Class A properties is still very strong,” he said.

Bob Adnapoz of Colliers Dow & Condon in New Haven has seen similar investor interest.

“I would say that the activity in retail in our area, central Connecticut, has been quite brisk,” he said. “There is continued investor interest.”

But he also has noticed the lack of product in the market. He noted, however, that there has been a healthy amount of expansions and renovations, like on the Post Mall in Milford. Investors have been showing interest in shopping centers of all sizes, he said.

“The interest is there,” Adnapoz said. “[Retail] has been an active investment vehicle.”

Smith said he sees a similar trend. Retail projects, whatever their size, usually get under way with the anchors in place and with a significant amount of pre-leasing, he said.

“The issue in Connecticut has always been that the municipal permitting process is very difficult,” Smith said. When retail centers do eventually get built, they are almost always successful, he said.

In May, Prudential Connecticut Commercial Real Estate brokered the sale of a mixed-use property at 33 East Ave. in New Canaan, including one building used for retail space. The entire property, which also included a four-family residence, sold for about $2 million.

‘Just as Busy’

According to a survey of institutional investors by the Chicago-based Real Estate Research Corp., the retail sector, which is comprised of regional malls, power centers and neighborhood/community centers, earned an average rating of 4.6 on a 10-point scale.

Vacancy rates climbed from April to June by nearly a full percentage point, from 7.6 percent to 8.5 percent.

“In part, this is due to the slowdown in retail sales in some areas because of an increase in housing costs, as well as the rising cost of fuel,” the report stated. “With these factors not expected to improve greatly, the retail sector is likely to see continuing availability increases.”

But in Fairfield County, activity in the first half of this year has been as strong as it was last year, according to Carl Wunderlich, an associate at Cushman & Wakefield.

“It’s been just as busy,” he said.

Some markets, like Greenwich and Westport, have even gotten tighter.

“That’s where everybody wants to be,” Wunderlich said. “It’s because of the demographics.”

The county’s healthy purchasing power keeps attracting more stores.

In the rest of Connecticut, Class B and Class C retail properties are suffering more than Class A properties. There is less investor interest because – unlike with Class A properties – investors of Class B and Class C properties are more sensitive to the rising interest rate, Angelone said.

Wunderlich’s firm was involved in the sale earlier this year of a five-property, $55 million portfolio that included Burr Corners and Manchester Plaza in Manchester.

In the second quarter of this year, shopping centers captured 17.9 percent of all transactions nationally, which was slightly higher than 16 percent in the first quarter, according to RERC’s survey. The average per-square-foot price dropped to $194 from $208 in the first quarter, a decline of 9.3 percent.

“As one of the first sectors to see strong improvement, retail is now becoming one of the first to slow down,” the report noted.

But experts in Connecticut expect the retail market to see more of the healthy level of activity it enjoyed in the first half of the year, and that space on the market now will be snapped up by interested investors.

The apartment and industrial warehouse sectors across the country saw more favorable conditions, according to RERC’s survey. The respondents rates those property types at 6.3 points, the highest among the major commercial real estate sectors.

The overall commercial market in the East region of the country did well, according to the survey.

“The west region of the nation edged out the south region in terms of percentage of completed transactions by 31.6 percent versus 29.2 percent. The East and Midwest had 25.4 percent and 14.2 percent, respectively,” according to the survey.