New Haven’s Economic Development Administrator Lays Out
The Fundamentals of the City’s Economic Rebound
Matthew Nemerson is the City of New Haven’s Economic Development Director. He was appointed in December 2013 soon after New Haven mayor Toni Harp won election. He succeeded Kelly Murphy, who held the position for eight years under former Mayor John DeStefano. Murphy’s era was seen as the start of a significant amount of development in the city. Under Harp and Nemerson, development appears to be accelerating further, especially in the greater downtown area.
Nemerson went to Amity Regional High School and on to Columbia College and eventually to the Yale School of Management. He was a founding vice president of Science Park, he served for 13 years as the President of the Greater New Haven Chamber of Commerce, Chief Operating Officer of Netkey, a Branford-based technology company, and as President of the Connecticut Technology Council for ten years before his appointment in New Haven.
Business New Haven publisher Mitchell Young interviewed Nemerson to help readers get a handle on the current development climate in the city of New Haven.
We’re going to ask the last question first. How does it look overall with developer interest in the City of New Haven?
Without exaggeration, it’s excellent. Every developer that is building a building or has built a building wants to build another. We get calls every day from developers who are looking to do projects that are in the $10 to $50 million range.
We don’t get that many people looking to do $200 or $300 million projects, the huge Boston and New York people. We do get brokers and land aggregators who represent them and want to pitch them on projects if they can put together enough land for them.
You’ve been doing economic development in New Haven since the mid-1980s with Science Park. What is the change, what are the forces of the current interest?
There are three or four that are coming together, some of our doing. We have a very professional and well thought out government involvement in economic development. We have an excellent planning staff, It has been led by one person for twenty-two years, Karyn Gilvarg.
It is hard to put together, even for a small city a consistent way to look at the entire city. You have political issues, market issues, having one overall philosophy and institutional memory creates a sense of professionalism and stability.
The Harp Administration created a very high functioning building; permitting staff, we turn things around very quickly. When we don’t do things quickly, it’s because there are issues that the developers and their construction people understand. In some smaller towns, they can be very frustrating because they’re either not knowledgeable or they don’t have the time.
We get back to developers and set up meetings within twenty-four hours. If someone calls us, they’ll have a meeting in a couple of days, we’ll come in on a weekend. We are totally customer oriented, everything from planning to the actual construction, permitting. We have a real flow now, the developers tell us it is very easy to work in New Haven now.
For many, many years, almost decades, no developer had done a second project, unless they were literally New Haven developers like the Fuscos. Now we are finding that these out-of-towners have been shopping around, looking in New Rochelle, or White Plains, they come here and even when it gets complicated, we’re working with them everyday and every week.
We can’t look back and say it is all in one direction, the 80s still were the high water mark in terms of construction and development. We built four major commercial buildings within a span of three and a half years, it’s like the Yankees winning five pennants in a row.
We [Harp administration] have a very clear vision of growing the city and when all is said and done, the Alders [ Board of Alderpersons] understand the need to bring in the building permits and create a bigger tax base.
Why is it that it has caught on now?
The things that have changed in terms of the environment are these new building techniques. [Previously] you had to build a 12 to 30 story steel apartment building or you could build a three or four story suburban style building, it didn’t leave a sweet spot for [small] cities.
A lot of in-fill couldn’t happen until rents started to go up in the outer ends of the New York Metro. Rents have gotten so high in New York and in Brooklyn and in Jersey City that it has created a shock wave throughout the region.
People who are traveling from New York to Boston to Philadelphia, when they see a city that has $2500/month for a two bedroom, they say that’s affordable. People here used to say $1500 was the top. Now they say for a really great apartment, I might pay $3500. That’s not just true here, it is true in Stamford, Norwalk, even in Worcester, in Providence, Hoboken and Morristown [NJ].
What about 360 State Street?
That was an anomaly and there were special mortgages. 360, while it is an exception, it proved that the rents were there. The form factor of building a $180 million 500-unit building didn’t make sense [now]. Building 150 or 200 units at a lower cost with the higher rent suddenly made it possible to do development.
A new construction technique, which is only about four years old and permitted in the building code for about that long, is called a “wood over podium construction.”
Now you can build five stories of wood under the code which you couldn’t [really do] before. What was added was you could build the five stories on top of a steel or concrete podium, and put parking underneath.
The allowance of “Podium” and the wood on top was a game changer. Very quickly, technology came in and developers realized the wood part of the buildings [could be] computerized. Most of the wood structures are computer designed. built in factories and shipped to the site.
All of the buildings that are going up in New Haven or Hartford, Norwalk: they’re assembling product, the hard cost probably came down by 25%. That meant you were going from the high $200s [per square foot] to the low $200. Then you add that to the rents going from $1500 a month to $2500-3000 per month.
Suddenly the numbers worked in places like New Haven and for a medium size developer, suddenly we were the sweet spot.
You have to have people and jobs?
Cities that are growing have a concentration of jobs and incomes that aren’t producing things, but are producing knowledge. Knowledge, software and biotech, where you create a proprietary product and then license it. Designing new drugs is what happens in New Haven, we don’t package them here.
The other big trend, is that big companies are buying smaller companies and the smaller companies tend to cluster around big medical centers, and medical schools and universities. If you draw a line from New York going East, New Haven is the first big medical center, university town, with rents, and the planning and the ability to absorb [development].
That isn’t to say that White Plains or Stamford or even New Rochelle hasn’t grown more, but they’re commuter cities or financial transaction cities. We are the first knowledge creation, well run, now business appropriate, in terms of all of the costs in the New York Metro.
Nearly every day people will ask, where are the people coming from to fill the apartments and where are they working?
Economies tend to work in thousand square mile to two thousand square mile areas depending on commuting times. The average person in America commutes twenty-three miles. As incomes go up, people commute longer distances.
If you draw a line of maybe forty minutes from New Haven, there are 800,000 jobs. People look at the 80,000 jobs that are in New Haven and say “is there going to be another thousand jobs.”
There is not a lot of job creation in Connecticut, but there are baby boomers that are retiring and [many] from really good jobs.
There are a lot of job openings for younger people, millennials coming in. There is also conversion from a production-oriented jobs to information and knowledge creation jobs.
There are a lot of jobs in New Haven. Alexion just moved 1,200 jobs here, if only five hundred [of those employees] move to New Haven, that’s a lot of apartments.
So let’s move to some “micro” questions about developments. Let’s start with the Coliseum site, Live Work, Learn and Play?
That’s 375 units of housing. We’ve opened three hundred and sixty six at the Corsair [State Street].
Other things, like a hotel, were supposed to go in that development.
It was a concept that was much more complicated and harder to achieve, but when it was suggested, there was no Corsair, no Novella [apartments on York Street in New Haven]. It turns out that some of the technical issues of building on the Coliseum site, next to the highway and the train tracks, those issues weren’t [fully] taken into consideration.
We’ve spent the last two years trying to figure out how to move the main electrical transmission electric lines [buried underground] which connect two huge substations that are part of the New England Grid. It has been very difficult.
It is the last project [in the city] where we are giving the [developer]land so we have much less to work with. That land is probably worth $10 million, if not more. Spinnaker [Spinnaker Real Estate Partners of Norwalk] is probably paying $20 million for a similar site up the road five blocks, the lot in front of Frontier.
What’s going in there?
We don’t know yet, but it’s probably the size and complexity of the Coliseum project. It’s going to be 100% privately financed, they’re not asking us for anything but a little more zoning so they can build to the density that makes sense.
So does that mean Live Work, Learn and Play is dead?
No, it is definitely going to happen, but it was put out [originally] as the transitional project to make New Haven a real place. New Haven is [now] a real place. With the $10 or $15 million off the table, the truth is, we can’t move the utilities unless we figure out how to do it for free.
Going back to the mid-2000s the Coliseum site was always linked to the Ninth Square and to the [Metro North] Train Station, it was to be the transition to those two areas.
One of the good things that is happening is that the Ninth Square is going through transition because the McCormack Baron Group is looking to sell that. Finally, and this is one of the great achievements of the Harp Administration, is that Church Street South, after fifty years, is going to be torn down and totally rebuilt.
What’s the time frame for Church Street South?
I’m not sure if it will be started next year, or there will be another year to do planning and permitting. The assumption is that the [developer] will be Northland. They have been very helpful in moving people.
That project evolved from the corner of Church Street South to the other side of the highway and the Coliseum site. You almost have to see that as one contiguous development concept, with multiple developers. The sweep comes from where the bridge comes from Long Wharf all the way to George Street, one neighborhood.
Let’s take a couple bites on Long Wharf?
At one point SCSU [Southern] was talking about renovating or demolishing the old Gateway Community College building and putting something there. The sign is still up—for a nursing school?
The building that Southern was planning to build there, which was a social work and allied medical building, the nursing school they decided to build on campus.
They’ve been very clear about their need to have a graduate facility for evening classes. It would be for executive MBAs, maybe Masters of Social Work, for students or night students from the region who want to get a degree but aren’t on-campus matriculating students. They want an easy to approach, highly visible graduate center. What they have said to us is that it doesn’t have to be on that parcel, if they could get a trade off [for their ownership], or if they could be incorporated into a development on that site, they could contribute to it.
You’re quoted a lot about how little land New Haven has. The Corsair development is on two to three acres. Long Wharf generally is a big parcel by New Haven land standards, and that’s underdeveloped.
[Interrupts] Not when you’ve been around for 375 years, we’re talking all of fifty acres, which is tiny and that’s all you got left.
We have two big retailers [Ikea and Jordan’s], not necessarily the “highest and best use,” both sort of happened to Long Wharf, and forgive us, but weren’t part of a “plan” to put them there?
We have the Coopers Robertson plan, [developed in 2006 and now the city is seeking funding from the state to update a Long Wharf plan there is an existing beautiful plan on how to do things there.
As you said, now we have Jordan’s, we didn’t know what the Register [former headquarters of the New Haven Register newspaper] site was going to be and now we know it’s a furniture store. We had the Pirelli site and the mall site [IKEA] and the refrigeration site. And we have the third factor, which is the [Metro North] maintenance yard, which is growing, growing, growing, the “monster that ate Cleveland,” sort of. But it is a very important thing and New Haven wouldn’t be New Haven without the New Haven Railroad.
There are some other good
We have the food terminal site and the Teletrack site. And if you could figure out how to do it, you could take the parking lot site of Assa Abloy and merge with the [Regional] Water Authority and [Gateway sites]. But those last two things are almost impossible without literally having a billion dollar development in front of us, because they are so expensive. To move the Water Authority or to build a garage that would be suitable to Assa Abloy on that soil is very, very difficult.
The Teletrack site is literally for sale and the food terminal site is always for sale and “make me an offer” and there are [existing] leases.
Something that is irritating is the failure of the City of New Haven and IKEA to develop the Pirelli Building. Marcel Breuer, the architect and ironically, an early modern furniture designer, is good enough to have the Metropolitan Museum of Art name a museum after him, The Met Breuer. When is the city going to play hardball with IKEA, which claims to be a great global corporate citizen?
Actually, we are playing hardball and IKEA has called the mayor’s office several times to complain about me. I’m telling you the truth, within the last six weeks, IKEA has complained that we are on TV and talking to people about the Pirelli building being a hotel.
I think IKEA has always had two sets of concerns. They think there is a lot of remediation that has to happen and they want to make sure that they don’t end up having to pay for it without getting anything out of it. That’s absolutely legit, what we’ve said is: you give us the building, we will do it when we have the state committed to helping us clean it up.
The other issue, and I was just at IKEA getting furniture for my daughter a few days ago so I experienced it first hand, they’re afraid that a hotel around their entranceway will deprive them of their most important parking. We have to make sure to replace lost parking on the site. The State is going to be giving us a site across the street where the big pile of dirt is, so all these things are coming together.
So the big pile of dirt will be going soon, we hope?
Yes and it’s suppose to be 250 spaces of parking, part of their leave behind. The State has had cutbacks and they’re wondering if they can afford to do it.
They can think they can leave a pile of dirt, but it would end up all over that decision maker. What’s the time frame for the building of the boathouse, because that will impact everyones view of Long Wharf.
Construction has started, they’re prepping things, a lot of the work is underneath the platform. All the crew is there, there are construction trailers, it will be done in a year.
Do you have a bucket list you want to accomplish – besides just being the glide path for developers to come and do their thing?
Of course, it’s not me it’s the Mayor, she’ll have things, this is for the mayor to sign off on. The Mayor is very active in all this and in a two year mayoral cycle, [laughs] these are things for her to decide.
[laughing] Gee I thought we all have our fantasies and wish lists?
Yeh, I want three 30 story buildings on the Teletrack site, I want a New Rochelle or South Stamford style complex where people can take a little jitney or walk to the train station. I want to compete with Stamford and New Rochelle with major commuters on a waterfront high rise luxury with a platform and retail that will bring us ten million dollars of taxes.
The other stuff, and I think the Mayor would agree, on her list of things is the Ninth Square to be filled out. No surface parking and fenced in unused lots and the side of the railroad to be filled out.
We want that to be seen as the most dynamic high tech job-oriented livable neighborhood in the Northeast between New York and Boston. Everything east of Church Street from Trumbull Street to the bridge, we want that to be seen as a sort of Jersey City/Morristown complete, functioning, fabulous area that fuels the district, Science Park. Wooster Square, the Hill and all the neighborhoods.
That piece has to be world class, it’s walk-able, it has two train stations, it’s got the Green on one side and Wooster Square on the other. It’s getting there, but it is still a big work in progress, but the canvas is ready for a world class northeast recognized neighborhood. BNH