Follow the Money

Greater New Haven, and especially New Haven itself, have become places where investors are looking at affordable properties.  Many have been priced out of New York and Boston, but know that our market lies just between those two cities, and that real estate is way cheaper here than in those two markets.  Therefore, many buyers have swooped in and bought (sometimes even sight unseen) buildings, especially multifamily housing units.  New Haven had the lowest apartment vacancy rate in the country, so it makes sense that investors would seize on that to buy or build.

But that also opens another avenue, and perhaps one more suited to local owners and investors.  What services will those apartment dwellers need?  We wouldn't have the infrastructure in place for all those new units, so there's a big opportunity.  Would you like to own or develop retail, restaurants, service economy space, or parking?  Here's your chance!  Be the person who provides the missing links for the new citizens of the city, and you may be handsomely rewarded.

New Haven has lowest residential vacancy rates in the country in 2013

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.

Investment Real Estate in Greater New Haven

To make money in New Haven real estate, a person needs to know that it is, at heart, a university town.  The growth is in education and health care (the latter being here in some large part because of Yale's medical school), as well as biotech (ditto the sentence above). We are disproportionately employed in the arts, again in part because of schools, and also because our highly educated workforce values the arts greatly in evaluating quality of life issues.

These factors tend to produce a population in some parts of the region that can be quite transient - students, graduate students, residents, artists, and "hired gun" executives.  At the other end of the spectrum, we have a very poor inner city area, with high rates of unemployment. Those two groups combine to produce a high need for rental properties at every price point, and contribute to New Haven having the lowest apartment vacancy rate in the country (about 1 and ½ percent).

If you've read the two preceding paragraphs, you're probably already in the market for residential investment property.  Join the club!  We have a great demand for those types of listings, and are always on the lookout for more.  New Haven now has rentals that exceed $5,000 per month for an apartment, as well as Section 8 housing (in one instance, in the same building).  Investors have a choice, therefore, about the segment of the market where they feel most comfortable.  There is also a shortage of houses for rent, and we are starting to see activity in that sector as well as the strong demand for multifamily homes that has existed, particularly near the colleges and universities.

Of course, where there are students there is also a need for restaurants, bars, retail, and health facilities, so investment property does exist in other sectors as well.  Greater New Haven is considered to be significantly "under-retailed", and 06511 is reported to be one of the nation's hottest mail-order zip codes, the theory being that the people in that part of New Haven have high incomes and not enough retail outlets to satisfy their consumption preferences.

So, whether you'd like to be a landlord, a franchisee, or simply a holder of a potentially valuable future income stream, we can find what you'd like in Greater New Haven, at any time that you think that you've had enough of entrusting your wealth to the increasingly volatile stock market.

Where Housing Grows, Retail Follows

I blogged last time about the low vacancy rate for apartments in New Haven, and I'd like to expand on why that matters to the commercial market.  When people move into an area, they want the services they use to be convenient.  So, once residential appears, developers, franchisors, and service providers follow.  Companies use demographic information to determine where they should expand.  They know that renters eat out, go to bars, and seek out entertainment, preferably without getting into a car.  After all, that's why they rented in a center city to begin with. Recently, 360 State Street opened in the Ninth Square in New Haven and is already up to 80% occupancy.  I noticed that a new Irish pub just opened on the corner of the open space behind 360 State.  Would we need another Irish pub (there are six between that one and the center of Hamden) if not for all those renters?  This is especially true with renters, who may have more disposable income than new buyers. Also, the vast majority of the 360 State renters bike, walk, or take the train to work, making close by services more enticing. Since 360 State Street is so far ahead of projected occupancy rates, it has already had an impact on the area around it, and that will continue.  Soon we will see the food co-op opening, and I expect that dry cleaners, convenience stores, and pharmacies to follow.  Already, the chain deli around the corner is one of the best-performing franchisees anywhere.  Why?  Location, location, location.

Downtown New Haven has retail opportunities that should excite both investors and business owners.  And that means that the time to act is now.