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What Goes Up
In commercial real estate, it's out with the old (the New Haven Coliseum) and in with the new (a reborn Chapel Square Mall?) in 2003
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Business New Haven
12/23/2002
By: Melissa Nicefaro
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What a year it's been.
Companies come and go. That's not news. But it's where they come to and from, and why they go - that's often newsworthy.
This past year has been interesting for real estate, to say the least.
In November the City Plan Commission approved Swedish furniture retailer Ikea's application to open a 300,000-square-foot store at Long Wharf. The preliminary plan showed an eye-catching structure known as the Pirelli building would be demolished.
The Pirelli building was designed by Marcel Breuer, a pioneering 20th-century architect and designer who also designed the Whitney Museum of American Art in New York and Yale's Becton Engineering & Applied Science Center.
The city's initial reaction to the project was favorable, but the city requested that at least the front of the building be saved. Over the course of the fall, Ikea representatives met with local architects and other preservationists, and as a result, revised plans. The company reoriented the entrance for its new showroom, which initially faced Sargent Drive.
The Board of Alderman's legislation committee recommended approval of Ikea's planned development district. Ikea hopes to begin construction at the Long Wharf location in February and open its doors here in the spring of 2004. The New Haven Ikea will be one of 15 U.S. stores and more than 170 worldwide. Features are to include a larger children's play area than other stores as well as a 400-seat restaurant.
As Ikea sought to penetrate the affluent southern Connecticut marketplace, Connecticut-based discount retail chain Ames was throwing in the towel.
Following in the fatal footsteps of Massachusetts-based Bradlees and Norwalk-based Caldor, Ames Department Stores Inc. announced on August 14 that it would cease operations in October, one year after seeking bankruptcy protection and struggling to reorganize.
Ames shuttered all 327 of its retail stores, idling about 22,000 workers in all, including some 2,100 in Connecticut. Ames' Rocky Hill headquarters closed as well, a blow to that central Connecticut community which counted on Ames as its seventh-largest property taxpayer.
Ames' fate was sealed by the triple whammy of a slowed economy (in its closing announcement, the company cited back-to-school sales far more meager than it had projected - an ominous harbinger of holiday-season sales to come), rapidly evolving competition and a crushing debt burden. After it acquired the Zayre discount chain in the late 1980s, Ames was forced into its first bankruptcy filing. Its 1990s purchase of Hills Stores Co. of Massachusetts saddled the company with a debt load it ultimately could not carry.
Ames, which once earned $4 billion annually, at its peak was the country's fourth-largest discount retail chain following Wal-Mart, Kmart and Target.
If the closing of Ames' stores marked the end of one era, another dawned as the first new office building in downtown New Haven in more than a decade was erected. Not only is it the first new office facility built since the early 1990s, it's the first speculative building of any sort in recent memory.
On September 30, the last steel beam was raised into place atop of the six-story One Audubon, a 60,000-square-foot building. The project was developed by the Acorn Group, owned by former Starter Sportswear founder David Beckerman. One Audubon is attached to a 328-car garage as well as Granite Square, a 48,000-square-foot office building at 700 State Street. Built in 1990, it is likewise owned by Acorn.
One Audubon will echo the glass-and-granite block construction of Granite Square. General contractor Giordano Construction was abetted by a dry summer to push the building ahead of schedule. Completion, originally scheduled for next fall, may come as early as the summer of 2003.
Acorn is currently developing three properties: One Audubon, 370 James Street [the former Starter headquarters] and land off Derby Avenue in West Haven.
Acorn's construction of a new technology campus in West Haven near the New Haven line will be one of the major developments in commercial real estate in 2003.
Work on the Acorn Technology Campus off Route 34 has begun with the construction of roads and drainage.
The Acorn Technology Campus is eligible for real estate and personal property tax incentives offered by the city of West Haven. Tax incentives lasting up to ten years will be based on the cost of improvements and personal property. The incentives will allow the developer to pass along savings to tenants.
The site has been fully approved as a Planned Unit Development (PUD) of up to 1,143,317 square feet in varying building sizes. All local and state approvals have been obtained, including planning and zoning, wetlands, State Traffic Commission and Regional Water Authority.
Though no space in the new development is leased yet, Realtors say they have had to turn away potential tenants that didn't fit the tenant mix of an office/technology park.
A technology company (as opposed to development) made real estate news this year when it packed up and left what some view as the biotech capital of the universe.
Last year, genomics firm CuraGen Corp. announced that it would move to a new, 88-acre campus in Branford on the old Bittersweet Farms site. That, along with Alexion's move several years ago to Cheshire, raised the ire of some who saw the biotechnology firms as the engine that would drive New Haven's economic future.
Marc Nevas of Westport sold the property at 777-779 East Main Street to CuraGen for about $2.3 million, further upsetting Branford residents who much preferred the character of a farm-type village to a bustling biotech company.
CuraGen currently has facilities on Long Wharf in New Haven and on Route 1 in Branford. In 1997, it moved to Long Wharf from Science Park, the non-profit incubator for start-up companies co-sponsored in the 1980s in the New Haven Enterprise Zone of Newhallville by Yale University.
CuraGen's success is remarkable given the company's humble beginnings. Founder, president and CEO is Jonathan Rothberg, a native New Havener, while teaching at Yale in the early 1990s, conducted research in the basement of his New Haven home.
CuraGen moved from New Haven, but it looks like Gateway Community College will be staying put - until 2007, at least. It has been a continuing struggle to secure the resources necessary to either consolidate the school's Long Wharf and North Haven campuses - or build a new campus in downtown New Haven. The cost of such a project is tagged at about $140 million, regardless of its location. Gov. John G. Rowland has proposed that $60 million be allocated in the state budget to Gateway next year for consolidation.
City and state officials appear to have reached a consensus that either the former Macy's or Malley's department store sites would be the spot for Gateway's relocation and consolidation, but then there is the matter of some $80 million the college must procure first - and that is based on the most recent estimate for a new building, classrooms, and all the fixings. That is also assuming the promise commitment of $60 million in state funding survives the current budget crisis. Gateway officials estimate it will take about five years to raise the funds. The college is currently in the “making friends” stage and appealing to the business community for a commitment to both funds and support.
Meanwhile, as 2002 drew to a close, the Chapel Square Mall's new owners were reportedly close to a deal with a tenant for the second floor. A handful of other deals at the mall were purportedly also in the works.
A restaurant at the corner of Crown and Temple streets is a possibility.
The mall (yes, there was still a working Chapel Square Mall up through November) was the subject of a legal battle for the better part of the year. Chapel Square Development sued 21 tenants who refused to vacate the mall by May 31.
In December, owners (New Haven-based David Nyberg and Philadelphian Ron Caplan) and tenants reached a settlement. Chapel Square Development purchased Chapel Square Mall and the adjoining 900 Chapel Street office tower at the beginning of the year. The development duo has building permits for partial demolition in the mall and wall framing on six floors of the office tower, according to published reports.
Though no plans have been reviewed by city officials, developers have said they are considering a gourmet food marketplace. An office tower renovation into class A space is still planned. Plans for residential space have been scrapped.
The Elm City may yet get its mall back But not before a lot of cleanup.
Nyberg and Caplan had a busy year indeed. The two also duo to form College Street, LLC and successfully redeveloped the former Strouse, Adler Co. “Smoothie” foundation-garment factory on Olive Street into upscale apartments. All of the apartments at the five-story, 170,000-square-foot complex, are leased.
The Strouse, Adler project is notable not only for its success, but also for the speed of that success. Construction on the Civil War era complex began only in September 2001. Although the developers accepted their first apartment deposit in January 2002, the units were not marketed until April. When they hit, they hit.
The units themselves, renting for between $750 and $2,850 a month, feature hardwood floors, large windows, crown moldings, and some upper level units enjoy panoramas of New Haven Harbor and Long Island Sound beyond.
Strouse, Adler began construction of manufacturing space on the site in 1860, expanding bit by bit as the company grew into the 20th century. The company continued to produce dainties and unmentionables at the site until 1999 when Strouse, Adler's by-then parent company, the Sara Lee Corp., closed the facility for good in favor of cheaper labor markets in the South and Puerto Rico.
In 2000 Ansonia Acquisitions V, LLC of New York acquired the complex for $1.8 million, intending to turn it into residences. In August 2001, having apparently changed its mind, Ansonia instead sold Strouse, Adler to College Street, LLC, Nyberg's firm, for a reported $2.6 million. Nyberg did not long let the grass grow beneath his feet, commencing construction the very next month.
The city announced in July that Veterans Memorial Coliseum would be razed. However, the timetable for the actual demolition is dependent upon securing state financing for the project, expected to cost upwards of $20 million.
The city faces potential lawsuits from at least two parties with interests in the Coliseum. The New Haven Ninjas arena2 professional football team was in the middle of a two-year lease at the time the closing was announced, and Ninjas officials have said they may seek legal redress.
The city also still pays about $1 million in annual debt service on the Coliseum's construction, completed in 1972. About $9.6 million in principal remains outstanding.
The city and its arts patrons are lobbying for as much as $40 million in state aid to demolish the New Haven Coliseum and build a new home there for Long Wharf Theatre.
In September, the contents of the Coliseum were auctioned off. Items ranged from he arena's overhead scoreboard to production lighting and fitness equipment as well as some 8,800 Coliseum seats. Kitchen equipment, locker-room fixtures, ice-resurfacing equipment (including two Zambonis), vehicles, office furniture, computers and memorabilia such as posters also went.
The closing of the Coliseum understandably provoked opposition from long-time residents and hockey fans. A project in nearby Ninth Square, however, spurred little to no controversy.
A grant of $13.2 million was given to the city of New Haven for Phase II of the Ninth Square downtown redevelopment project. The state funds are being used for the construction of more than 200 apartments, renovation and retention of 25,000 square feet of ground floor retail space, and creation of 138 new parking spaces.
The Ninth Square project provides numerous benefits to New Haven. By renovating buildings that are vacant or functionally obsolete, the mixed-use development increases the number of residents living downtown, creates new opportunities for retailers, restaurants and other businesses, and increases revenues to the city.
Completed in 1994, Phase I of the Ninth Square project was the first major mixed-use project to be undertaken downtown and demonstrated the successful conversion of commercial space to residential reuse. Phase I included the construction and rehabilitation of 335 rental units, 50,000 square feet of commercial space, and over 600 parking spaces. The total project cost for Phase I was $90 million, which included $7.2 million in state PRIME (Private Rental Investment Mortgage and Equity) funding through CHFA.
Phase II is a mixed-use development of two key blocks in downtown New Haven. The first block, directly across from the New Haven Green, includes plans for the substantial renovation and retention of 25,000 square feet of ground floor retail space, the retrofit of the former W.T. Grant department store to accommodate a 138 space parking garage, and the conversion of upper story commercial space to 121 residential units. Work on the second block involves the historic renovation of four commercial buildings to create 56 apartments. In addition, new construction will yield an additional 44 units.
When completed, Ninth Square's Phase II will yield a mix of 221 affordable and market rate residential units. The total project cost is $39,872,795.
The city has secured three separate developers to undertake the projects: Block 235 Development Associates LLC, Salatto Real Estate, and Ninth Square Crown Street Project LLC.
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