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18 n e w h a v e n B I Z | S e p t e m b e r / O c t o b e r 2 0 2 0 | n e w h a v e n b i z . c o m By Liese Klein Uncertain Environment C O M M E R C I A L R E A L E S T A T E Despite pandemic, brokers see bright spots in New Haven's commercial realty market C hairs on balconies are what Rob Noeldechen looks for on his drives through New Haven, along with strollers, bicycles, plants and other signs of domestic life. ose items out in view mean someone has moved into one of the shiny new apartment build- ings that have sprung up across the city in recent years – and that the multifamily sector remains strong. "e key to commercial real estate is that your eyes are your best tool," said Noeldechen, a 34-year veteran of the industry and director of realty firm Marcus & Millichap Capital Corp. in New Haven. Traveling throughout the city, he looks for cars in garages and people on the streets. "When you see activ- ity, when you see people walking with bags in their arms, people are spending money." Noeldechen, who secures financ- ing for major commercial projects in the New Haven area, is most heartened by the activity at e Audubon, a new luxury apartment complex on Audubon and Orange streets. Even in the midst of the pandemic early this summer, new tenants were moving into the build- ing, which offer units ranging from $1,965 per month for a 593-square- foot studio to $3,027 a month for an 1,113-square-foot two-bedroom. It's a sign that new, high-end units are being absorbed into the market. "What's unique is that [New Haven] has got the strongest occupancy and absorption in Connecticut," Noeldechen said, adding that the vacancy rate remained at a low 3.4 percent for multifamily developments in the city going into the summer months, traditionally a slow time. Even with the uncertainty around the pandemic, low interest rates and ongoing demand for investment properties will likely fuel steady activity in New Haven's commercial real estate market into the fall, Noeldechen said. Retail woes e realty sector that is facing the most pressure is retail and it has for years as brick-and-mortar establishments face heightened competition from e-tailers. "Turnover in retail is noth- ing new," said John C. Wareck, co-owner of Wareck D'Ostilio, a large New Haven brokerage with a five-person commercial team. "at's definitely accelerated re- cently, and on top of that you have the challenge of businesses being wary and cautious." Ever-shiing regulations around safety and health relating to the COVID-19 pandemic are forcing retailers to reduce capacity, add costs and cut hours even as many patrons continue to stay home. e uncertain environment par- ticularly impacts restaurants, which were forced to reduce seating and may yet face more shutdowns if the virus returns full-force in the fall. Restaurants along Chapel Street have been especially hard hit by the closure of Yale facilities to most students and staff through the spring and summer. With the potential of more state-mandated shutdowns in the fall, aspiring restaurateurs are holding off on securing storefronts. "You're being extremely cautious about jumping on a space and signing a lease," Wareck said. Small mom-and-pops are suf- fering the most, but even national retail chains are faltering. In one case, Old Navy stores across the state are being sued by landlords for back rent and other charges. Hotels have also suffered devastating drops in bookings with the decimation of tourism and the cancelation of college events region-wide. According to sector analyst Trepp, 19.13 percent of loans backed by hotel properties were more than 30 days delinquent in May, totaling $16 billion nationwide. Hotel owners will have to wait until the third quarter of 2022 for A rendering of the planned biotech research building at 101 College St., to feature 500,000 square feet of labs and incubator space. John C. Wareck