Wilton Corporate Park is an office property being developed in Wilton by Davis Marcus Partners.
Everyone needs some space.
Retailers just gobbled up 7,000 square feet of new space in Branford. A 9,500-square-foot build-to-suit facility in North Haven is going to a medical services client, and development firm Davis Marcus Partners is confident enough in the market to start construction on 161,500 square feet of office space in Wilton.
The Davis Marcus project represents the $75 million second phase of Wilton Corporate Park, with two buildings totaling 280,000 square feet already completed and leased. The third is scheduled for completion next June. A fourth building, totaling 81,950 square feet, is slated for groundbreaking in December and completion in November 2008.
“Speculation properties are not done very much,” said David Fiore, senior vice president for Davis Marcus Partners, which has an office in Norwalk. But the lack of competition has prompted the company to go ahead with plans to add 243,450 square feet of office space to the market, he said.
“If you’re a tenant that needs 150,000 square feet of Class A space, you have very few options,” Fiore said.
He added that he also likes the location, 40 Danbury Road.
“Connecticut is not a growth state like Nevada or Florida or Texas,” Fiore said. “But there is still growth. And the Route 7 corridor has been one of the major growth corridors in the past 10 years.”
And while rates for Class A space top $100 per square foot in Greenwich and push $50 per square foot in Stamford, new space at Wilton Corporate Park will run at per-square-foot rates between $40 and $45, Fiore said. As tenants seek relief from the higher rents closer to New York, “the trend of moving to Route 7 will continue,” he added.
Jeffrey Gage, senior vice president for Stamford-based corporate real estate brokerage Albert B. Ashforth Inc., agreed. Albert B. Ashforth has been tapped as the leasing agent for Wilton Corporate Park.
“We’ve been pumping the buildings from paper drawings for the past six to nine months,” Gage said. Larger tenants tend to plan further ahead – such as for space coming to market next June – but “once it’s open, it will be fair game for anybody,” he said.
Speculation building comes down to the cost of making a comparable acquisition, he said. If the cost of purchasing a comparable building equals or surpasses the cost of construction, developers will build new space, he said. When tenants come shopping, Gage added, “the new box is always going to win.”
A Busy Sector
The appeal of new space apparently is strong with retailers, too.
A 7,000-square-foot retail plaza completed earlier this year in Branford was completely leased three months after opening, according to Kristin Geenty, president of Geenty Group Realtors and a member of the Society of Industrial and Office Realtors.
“Retail’s really been doing a lot of the leases right now,” Geenty said. “It’s one of the busiest sectors across the board.”
A recent report from the Federal Reserve states that New England retailers are reporting mixed results for the early summer months. Year-over-year comparisons show same-store sales ranging from low double-digit decreases to low double-digit increases. Likewise, capital spending plans are mixed, according to the report. Some retailers report putting plans on hold while sales remain soft.
But New Haven County, a secondary market once overlooked, is now poised to see more activity, Geenty said.
“The chain stores have been coming into the area over the past few years,” Geenty said. A large development of big-box retailers is planned for Branford, at Exit 53 off Interstate 95, she said. As the large chain stores arrive, the smaller boutique shops will follow, she added.
Outside of retail, Geenty said she has been seeing strength in the suburban industrial flex and office space, such as Old Saybrook Business Park.
“A lot of people don’t have traditional offices,” Geenty said. “They also have shipping and warehousing.”
One such tenant, Tantor Media Inc., has just entered a long-term lease for 8,000 square feet at the business park, she said. At the same time, the company extended its lease for another 11,000 square feet, also at the park.
The Old Saybrook Business Park consists of seven multi-tenanted flex buildings with an eighth building in the final stages of design. The current buildings total 218,000 square feet and are occupied by 23 various businesses. The base rate is $7.90 per square foot and can run higher depending on the use, Geenty said.
In addition to clients seeking flex space, the suburban markets are drawing another type of tenant.
“Doctors are now making house calls again,” said Richard S. Guralnick, a Certified Commercial Investment Member and a broker with North Haven-based H. Pearce Commercial Real Estate.
“Hospitals are putting up outposts,” Guralnick said. One example is the 3-year-old, 80,000-square-foot Yale-New Haven Hospital satellite facility in Guilford, which can handle pre- and post-operation procedures, as well as emergencies, he said.
“They’re bringing their expertise out to the suburbs,” Guralnick said. “We’re seeing that ring out all over New Haven.”
“The whole thing is about health care access,” said Guralnick, noting that suburban facilities are easier to reach than downtown locations. “It’s better business for them because people are more willing to keep their appointments,” he said.
Some of the medical uses are specialized, such as the 9,500-square-foot build-to-suit deal for a state-of-the-art kidney dialysis center in North Haven. The tenant, Fresenius Medical NA in partnership with the Hospital of St. Raphael’s, signed a long-term lease for the space, Guralnick said. Fresenius also has just signed a similar lease in Southington, this time partnering with Bradley Memorial Hospital, for a 10,000-square-foot facility.
“I continue to do a lot of office-medical,” Guralnick said. “The population is getting older. It’s a market that’s not going to go away. So we’ve seen big growth in medical.”
