Elm City is a surprising hotbed of new commercial construction projects
In the midst of a national recession, New Haven is undergoing something of a building boom. More than two million square feet in commercial projects is either under construction or recently completed, according to city officials - and that's not counting the Q Bridge project or Yale's proposed School of Management edifice.
360 State Street, 500 Luxury Apartments
The state of construction activity in New Haven right now is almost unprecedented," says Kelly Murphy, the city's economic development administrator. "It's the largest development boom that the city has seen in decades."Major projects now under way include the apartment high-rise at 360 State Street, Gateway Community College's new downtown campus, a new medical lab and office facility at 55 Park Street, and the ongoing expansion of city public schools. The city also is moving forward with major redevelopment plans for the Route 34 corridor.
"This activity builds off the investment that Mayor John DeStefano Jr. has made over the last 15 years," Murphy says. "Most of the projects are by private developers (and) this reflects New Haven's core strengths related to biotech, medical and information-based businesses. The city also is a center for the creative [businesses] such as architectural firms, and we still have a strong, albeit smaller, manufacturing base."
Murphy notes the city has also helped more than 100 new small businesses open throughout the city during the economic downturn as well, which have in the aggregate created more than 350 new jobs.
Commercial loans remain difficult to obtain, Murphy acknowledges. "We are lucky in that we are still building while many, many locations are not," she says. "In the near- to mid-term I think you will see in the commercial real estate market more purchases, at a severely discounted rate, vs. new construction."
Perhaps the most visible construction in New Haven is the new Pearl Harbor Memorial Bridge project over the Quinnipiac River. Workers currently are reconfiguring the interchange among Interstate 91, I-95 and Route 34. The $500 million project is scheduled for completion in 2016.
Near the interchange, the tallest building in New Haven has risen at the corner of State and Chapel streets. The $180 million, 32-story apartment complex at 360 State Street marks the biggest private investment in the Elm City in several decades. It signifies a growing demand for housing related to the continuing expansion of Yale University, Yale-New Haven Hospital and other large employers downtown. The building is slated to open in September.
John Keogh, senior associate at Colliers Dow & Condon in New Haven, says the area's growth results from several different trends coming together at the same time, including Yale's ongoing expansion and the boom in medical products and services.
"There has been a demographic shift as baby-boomers get older, and when you combine that with advances in technology, health care has become a very prosperous industry and that's showing up here," Keogh explains.
For example, the opening of the new Smilow Cancer Hospital at Yale-New Haven Hospital last October is now being accompanied by construction of an adjacent medical complex at 55 Park Street that will include 150,000 square feet of new space for laboratories and medical offices. The $80 million project is now under construction by Fusco Corp. and should be completed by year's end.
"These projects are fueling an ever-growing number of good jobs in the city and that has created demand for housing downtown," Keogh says. "I think Yale will keep building, although there may be a lull for a while. There is a good prospect that this kind of activity will remain strong in the city."
Another major project that recently began building is the relocation of Gateway Community College from Sargent Drive and a satellite North Haven campus to a consolidated campus in downtown New Haven. Demolition work has begun at the site of the former Macy's building off Route 34. The $182.7 million, four-story campus is slated to open in 2012.
Next up for the city is a major redevelopment plan for the Route 34 corridor, a vision that has been discussed many times over the past couple of decades. Murphy says city officials are negotiating with Winstanley Enterprises to build the first phase of the "downtown crossing project," a large medical office and laboratory building between the Air Rights Garage and College Street. Murphy says she plans to bring a development agreement to the Board of Aldermen later this spring or in early summer.
The idea for the downtown crossing project is to create a new medical district by eliminating Route 34 from the Air Rights Garage east to Union Avenue and redeveloping traditional intersections at South Orange, Church, Temple and College streets, followed by new commercial development focusing on the medical industry. The estimated economic impact includes the potential creation of more than 2,600 jobs.
A separate plan is being developed for the west side of the Air Rights Garage. The Route 34 Municipal Development Plan envisions the revitalization of the undeveloped corridor between Howe Street and Ella T. Grasso Boulevard, which includes 45 parcels on 37 acres.
City officials have delayed redevelopment plans for the former Veterans Memorial Coliseum site off Route 34 due to economic conditions. The $235 million project calls for one million square feet of residential, retail and office space and 500 permanent jobs.
"The city's decision to wait on the Coliseum site will enable us to develop the site in a way that is best for the city in the long run and not sacrifice the mix of uses and type of development that we want," Murphy explains. "This is a large site that will be here a long time and we want to develop it correctly."
drop capOn the residential side, the first signs of spring also are bringing signs of renewal in the region's troubled housing construction industry.
"The worst appears to be behind us," says Bob Wiedenmann Jr., owner of Sunwood Development Corp. in Wallingford and president of the Home Builders Association of New Haven County Inc. "We are seeing a noticeable increase in activity at our Web site and at our open houses."
Sales figures reflect the same trend: In January, the latest month for which figures are available, sales of single-family homes in New Haven County rose 8.0 percent compared with the same month a year earlier from 290 to 313, according to the Boston-based Warren Group. The region's median home price edged up 1.0 percent, to $199,000.
"We're selling houses," Wiedenmann says. "But the cost of obtaining building approvals remains very difficult. The requirements haven't been reduced, and the costs of developing a piece of raw land are the same as they were three years ago. Environmental regulations are getting stricter."
Housing permit numbers tell the same story as sales: Activity is rising, but the numbers remain very low compared with historical averages. Officials with the state's Department of Economic & Community Development (DECD) reported that a total of 179 permits to build new homes were issued in February in the 125 cities and towns the department tracks (the figures are not broken out by county). That represents a 15-percent jump from the January total, but an 11 percent decline from the February 2009 total.
In the first two months of 2010, a total of 335 permits were issued in the municipalities tracked by the state, up 15 percent from a year earlier. By comparison, nearly 800 permits were issued in those cities and towns in the first two months of 2007, and more than 1,000 were issued in the first two months of 2006.
Wiedenmann says it is still very difficult to obtain bank loans to build new houses, as well.
"Overall, I think this is a transition year - from a bad year in 2009 to what will hopefully be a good year in 2011," he says. "When the economy starts to improve I think there will be a shortage of new single-family homes, and prices will rise."
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