As of the end of 2013, New Haven had the lowest apartment vacancy rate of the 79 cities followed by Reis Inc. New Haven's vacancy rate was 2.2%, down from 2.6% one year before. There are many reasons for this, including the large student population, especially in graduate schools, which have very little campus housing. Also, its location on a major rail line makes New Haven a great place for people who work between New Haven and NYC to live, considering the ease of commuting and the amenities and nightlife offered in the city, particularly for young professionals. In addition, the high cost of housing means that more people will choose to rent instead of buy, pushing up demand in the rental sector. Average rents in the area were $1154/month last year. Hartford was the sixth tightest market in the survey.
What does this mean for commercial real estate? Retail and office follow housing, since people living in a region demand services and often choose more convenient work environments. In New Haven, we are seeing a major suburban employer, Alexion, moving downtown, both for the proximity to Yale and Yale Medical School, and for the benefits employees have for lunchtime and after-work dining, shopping, and entertainment. Also, younger employees will usually choose an urban setting when possible. Given the number of hours we all spend at work these days, having the ability to do errands or grab a meal is a plus for most people, and retail uses will prosper with higher levels of renters, especially since those renters are disproportionately clustered at the empty nester and young professional ends of the housing cycle, both of which are groups that eat out and go to events more often than suburban parents with children. One study quoted to me claimed that approximately 30 jobs in the service sector are created for each high-income renter downtown. New Haven still is under-retailed, according to national statistics, so this creates an opportunity for real estate investors and owners. Please call any one of our commercial associates, if we can assist you in prospering from this market condition.