William J. Beckeman, partner, investment sales and research for Finard & Co., writes in a "Finard Report" on the Greater Hartford area for the Winter 2001, "Overall, 2001 looks to be a decent year for the Greater Hartford retail real estate market, but there is greater uncertainty about the economy than in any time in recent years. If consumers stop spending, the on-going consolidation of retailers will only escalate and dampen demand for new stores--with further store closings likely to take place. Accordingly, there appears to be ample downside risk in the near term for retail property owners and investors."
However, if the economy rebounds in the near-term and provides the "soft landing" many in the business community are hoping for with little additional fallout of major retailer store closings, Beckeman writes that "the Hartford market should continue to show the same slow progress we witnessed this past year. And in the long run, the value of the underlying land should continue to grow--provided the region's population and jobs don't move elsewhere."
In terms of investment activity for 2001, he notes that last year there were fewer significant transactions completed compared to previous years. Beckeman expects that with the economic slowdown, activity in 2001 will be about the same as last year. "However, a meaningful and sustained decline in interest rates could spur additional activity and counteract the negative factors affecting the current retailing environment," he theorizes.
Some of the highlights of the Finard Report on the Hartford area include its finding that the region saw a decline in the retail vacancy rate from 13.4% to 12.4% in the year 2000. While there was an increase in overall retail inventory of net 287,000 sf, the market posted a positive absorption of 599,000 sf.
In terms of new construction, the largest new facility that opened its doors last year was the 450,000 sf Connecticut Commons in Plainville that has such tenants as Kmart, Old Navy, Levitz, Lowe's Home Improvement Warehouse, A.C. Moore Arts & Crafts, Loews Theater and Applebee's.
Finard & Co. reports that there were several significant retail conversions in 2000, including the demolition of the 146,000-sf East Hartford Shopping Center. The complex, which was 78% vacant when the wrecking ball came, will be used for Coca-Cola corporate activities, the firm states. In addition, the 90,000 sf former Pace/Kmart space in Manchester was converted to office/industrial space.
Beckeman notes that occupancy in the Greater Hartford area was fueled somewhat by the retenanting of former Caldor store locations in the region. Major retailers Ames Department Store and Wal-Mart occupied approximately 370,000 sf of former Caldor space in the area. In addition, former Service Merchandise locations in West Hartford and Enfield were absorbed by Wild Oats and Linen 'n Things respectively. JoAnn Fabrics and Crafts moved into the former Lechmere location in Newington in 2000, the report states.
While there was retenanting of some space, the area was hit by some large store closings in 2000 such as: Stop & Shop in Bloomfield, Three D Bed & Bath stores in Simsbury and Wethersefield, Bob's Furniture in Windsor and Cherry & Webb in Wethersfield.
New retailers coming to the area or expanding their presence in Greater Hartford are: Target, Lowe's Home Improvement Warehouse, Kohl's, Best Buy, Home Depot and Walmart, the report notes.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
