Empty-Store Space In Hartford Area Equals Four Huge Malls
Retail Vacancies Jump By One Quarter, Reaching 13 Percent
By KENNETH R. GOSSELIN
September 22, 2010
In just 26 towns and cities in Greater Hartford, there is enough empty store and restaurant space to fill more than four malls the size of Buckland Hills in Manchester.
The area, stretching from Enfield south to Berlin, had 4.9 million square feet of unoccupied retail space as of June 1, a staggering 23.4 percent increase — nearly 1 million square feet — from May 2009, according to a report Wednesday from KeyPoint Partners, a commercial real estate services firm.
And even though the recession ended in mid-2009, the report provided compelling evidence that the past year remained bruising for area retailers, especially those occupying the smallest spaces.
On Park Street in Hartford, there will soon be yet another casualty: a longtime music shop will close at the end of the month after 28 years in the same location.
Pablo Toledo, a Cuban immigrant, said he struggled to keep his store, El Palacio Musical, open during the past year, letting his two employees go and running the shop by himself.
"With the economy, the sales started to fall and they went down and down," Toledo said. "People prefer to eat first, and if there is something left over, there is this."
He points to a wide array of instruments, including acoustic and electric guitars, snare drums, congas and bongos, some of which he is now selling at a 50 percent discount to liquidate his stock.
The decision to close was more complex than just the recession, Toledo said. More consumers are getting their music from Internet downloads and are less interested in buying his CDs, once a vast stock of Latin jazz. He said he also had to compete with bootleg CDs sold on the street.
"When the customers don't come in the door and you still have all the bills, it doesn't make sense anymore," he said.
Across Greater Hartford, the retail vacancy rate — the percentage of retail space in the area that stood empty — jumped to 13.1 percent as of June 1, compared with 10.6 percent in May 2009, according to KeyPoint Partners.
That increase surprised even some commercial real estate brokers who often don't get an overall snapshot of vacancies across all sizes of space.
"Wow," said Tim McNamara, a commercial broker at SullivanHayes Cos. In Farmington. "I wouldn't have guessed it was that high."
It could take years for new leasing to bring the vacancy rate down to 6 or 8 percent, considered healthy for Greater Hartford, said Bob Sheehan, vice president of research at KeyPoint.
"It's going to be a gradual decline, at least two or more years," Sheehan said. "That's a lot of vacant space and there are a lot fewer retailers."
The surge came despite the small amount of retail construction in the area in the past year, an indicator that the economic downturn has made consumers more conservative in their spending. Monday, the federal government declared that the recession — the longest since the Great Depression — had ended in June 2009, but that did not translate into improved retail spending.
Mom-and-pop storefronts and smaller chains — spaces under 2,500 square feet — had the highest vacancy rate on June 1: 18.4 percent.
"Smaller retailers less than 5,000 square feet were highly vulnerable to the wave of store closings," the report said.
And even though spaces of 2,500 to 4,999 square feet logged the fourth-largest vacancy, the category showed the highest spike, soaring 35.7 percent.
Giant stores were generally unscathed, the report said, but the category of 100,000 to 199,999 square feet, representing 12.5 percent of the market by square footage, went from zero vacancies to 4.8 percent vacant, as Walmart closed a store in New Britain and a Sam's club location in Berlin.
Some spaces, such as those in the Silver Lane Plaza in East Hartford, have sat vacant for years and could have a tough time finding an anchor tenant to jump-start leasing. A broker representing the property declined to comment Wednesday.
The area's vacancy rate could have been higher.
When KeyPoint tallied the area's total inventory of 37 million square feet, it didn't include the Manchester Parkade for the first time. The long vacant Parkade has been targeted for redevelopment by the town of Manchester.
The survey also didn't include the newly completed but still vacant Front Street retail development in downtown Hartford, which encompasses 65,000 square feet.
Seven of the 18 Shaw's supermarkets that closed in the state were in Greater Hartford, but the majority of them were picked up by other competitors.
Even though the report painted a discouraging picture, brokers said there have been some faintly hopeful signs in recent weeks.
McNamara, the commercial broker, said he has seen some retailers begin exploring options for new stores, a sign that some may sense an opportunity to take advantage of rents that have fallen an average of 10 to 20 percent.
Some space tagged as unoccupied in the report has now been leased. That includes the three Circuit City locations in Manchester, Newington and Enfield that have been taken over by electronics retailer P.C. Richard & Sons.
But with consumer confidence down below last year's level, shoppers remain cautious about spending, setting the stage for a long, slow recovery, economists say.
On Wednesday, outside Toledo's music shop, longtime customer Fernando Cintron helps Toledo with his liquidation, hawking CDs lined up on a table to passersby.
"Step up!" Cintron says, speaking into a microphone hooked to an amplifier. "Palacio Musical is closing its doors. It's only four bucks for a CD. All originals."
Inside, Rafael Resto, who has shopped at the store for 28 years, negotiates a good price on a salsa guiro. It's tagged at $59, but Toledo lets it go at $35.
The store's closing means not only another vacant space, but the loss of something even more important: a place for local musicians to gather and talk music, building community. Resto, who plays in a Puerto Rican country band, once sold in the store a CD he recorded.
"This is the last store for CDs on Park Street," Resto said. "The skins for the congas and the bongos, I don't know where I am going to get them now."
Reprinted with permission of the Hartford Courant.
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