Low stock of commercial property in Stratford is a ‘barrier to entry’, some say

STRATFORD — Many business owners view Stratford as a business-friendly city.

It’s one of the most affordable communities in Fairfield County, which is a plus for the city, according to Mary Dean, director of economic development. Stratford also has access to transportation, with the downtown train station and easy access to Interstate 95.

A barrier to entry for local businesses, however, is a limited inventory of commercial real estate available, some say.

The city has taken steps to mitigate this, Dean said. They recently asked the Zoning Commission to impose a moratorium on new self-storage facilities, which occupy large areas with limited parking that make properties difficult to recycle for other uses in the future. , she said.

Aside from city-owned properties and regulatory measures such as the requested moratorium, there is little else the city can do to increase that inventory, she said.

“While it is not City property, we can only work with the various landlords and estate agents to ensure that we are aware of any new opportunities or openings for businesses wishing to come to Stratford,” said Dean. .

Steve Hodson, president of Hodson Realty, Inc., said inventory in some areas of the commercial market is tight in town. Specifically, the number of industrial warehouses and small-scale retail spaces is insufficient. The office space market, however, is where there is the most availability, as the way the workforce does business has fundamentally changed during the pandemic, he said.

That lack of supply could lead people to look to other nearby locations if what they’re looking for isn’t available, he said.

“It’s always a supply and demand in the economy,” Hodson said. “If there’s less supply and more people are looking for smaller spaces, and it becomes a challenge, they can broaden their search and look to other communities. »

Hodson said there hasn’t been much new construction in Stratford because there’s “really no appreciable vacant land” in the town. He said most of the land in the city is already “built up.”

One of the ways developers have started to increase that stock is through mixed-use development, he said. A popular choice in the area is to add retail space to the ground floor of an apartment complex. The 382 Ferry Boulevard complex is one example, he said, as initial concepts included a mix of 119 apartments and retail space.

Jon Angel, president of Angel Commercial in Southport, said the current market is strong and is largely due to an “abnormally low inventory of available buildings” in the area.

“I’ve been in business for over 32 years locally, and I’ll tell you in my entire career in these areas, I’ve never experienced the lack of availability like we are now,” Angel said.

Angel said the barrier to entry for new businesses “has increased dramatically” over the past two years.

The increase in e-commerce demand has intensified during the pandemic. The US Census Bureau estimates that online retail sales totaled more than $870 billion in 2021, a 14.2% increase over 2020 sales.

Thus, warehouses and distribution centers have sprung up in areas of need, including in neighboring municipalities. Among other things in the past two years, Amazon bought a warehouse in Trumbull in 2020 and a developer bought 14 acres of land in Stratford to build in February. Highlighting the strength of demand in the area, Angel, who brokered the 14-acre land deal, said it was entirely based on speculation.

Early anecdotal data suggests warehouse prices are up more than 40% year-over-year, according to Alexander Van De Minne, a real estate professor studying commercial pricing at the University of Connecticut. Better data for the past two years has yet to come out, he said, and most of it is proprietary. He said his department was raising funds to improve access to market data.

Van De Minne said the retail market has been split, with large retail establishments like malls and strip malls suffering as “street commerce” improves in the state.

“We’ve seen people move from cities to Connecticut in particular, or also to Hartford, even though it’s never happened before,” Van De Minne said. “And local street commerce, especially restaurants etc., they’ve really benefited.”

Small suburban offices also operated in the state, he said, as some did not want to return to their Manhattan commutes.

“There’s a logic that should see some growth, because a lot of workers are staying home and don’t want to commute to Manhattan every day,” Van De Minne said. “So we might think there’s more demand, and there’s anecdotal evidence, for local suburban offices closer to where people live.”

The future of the real estate market is slightly cloudy as the Federal Reserve has started raising the federal interest rate. Van De Minne said the impact this will have on the market is not entirely straightforward as property investors typically look to the future.

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