Hartford Business Journal

14 Hartford Business Journal • October 30, 2017 • www.HartfordBusiness.com By Gregory Seay gseay@HartfordBusiness.com T here are signs of a retail-space resurgence in central Con- necticut. But indications also exist that the competitive forces threatening to upend the traditional model of where to open or expand storefronts have taken root in this market. The result is a mixed short- and long- term outlook for the region's retailers and landlords. In some corners, new multimil- lion-dollar retail outlets are being developed amid hopes that a broader U.S. eco- nomic recovery will loosen shoppers' wallets. Other parts of Greater Hart- ford are seeing the continued closure of storefronts occu- pied by traditional brand names and the rise of non- traditional retailers taking their place. Consider: In East Hartford, construction is underway on a $105 million outlet mall, in the shadow of Pratt & Whitney and outdoor equipment/apparel retailer Cabela's. However, the 285,000-square-foot footprint is 20 percent smaller than originally planned, reflecting the unsettling reality of the U.S. retail market, developer Horizon Group LLC said. In West Hartford's Corbins Corner Shopping Center, owners of the shuttered store site for Sears, once one of America's dominant retailers, is undergoing a $27 million conversion to house restaurants and fashion, babywear and outdoor-apparel retailers, among others. In downtown Hartford, Connecticut- based Kathy's Urgent Care is preparing early next year to occupy the former CVS drug store space at the bustling corner of Main and Pearl/State streets. Rival urgent-care and outpatient-care clinic operators, along with private physician, dental and physical- therapy practices, also are tapping former retail-store sites throughout the region. Meantime, in suburban Connecticut, one of the fastest-emerging retailers doesn't sell clothing, houseware or food, but rather agri-tools, equipment and accessories. Tractor Supply Co. has opened more than a dozen stores in this state in recent years, and plans more, its Wethersfield develop- ment co-partner said. Brand name challenges The same pressures reshaping the U.S. retail landscape are taking root in Con- necticut, retail realty brokers and other experts said. The result is that large, traditional retail- ers, such as Sears, Toys R Us — which filed for bankruptcy earlier this year — and Ann Taylor, are closing stores. Even pockets of Greater Hartford's retail market that seemed immune have gotten wakeup calls in recent years: Enfield lost its Macy's depart- ment store; West Hartford shed a Walmart Neighborhood Market grocery barely open two years; and Farmington lost its Sports Authority sporting-goods store, now being converted to a Burlington Coat Factory. Simultaneously, other national, regional and local retail brands have slowed or halted their plans for more stores, even rethinking their need for brick-and-mortar outposts in the face of mounting competi- tion from online retailers like Amazon and the increased purchasing power of Millen- nials, who are more prone to shop on a computer than on a retail floor. Add to that the shrinking pool of creditworthy ten- ants and reluctance in some banking quarters to finance retail developments, and the scene is set for continued tur- bulence in Greater Hartford's retail real estate mar- ketplace, said Matt Halprin, principal and co-founder of New England Retail Properties LLC, a Wethersfield retail brokerage and developer. Even if retailers got their space rent free, Halprin said they would still have to gener- ate sufficient sales value to at least cover the cost of salaries, utilities and other overhead. Connecticut's shrinking population, too, is impacting retailers choices about where to position stores. Most retailers, experts said, choose to locate in regions of the state and nation where headcounts are rising. According to Massachusetts retail-real estate market analyst KeyPoint Partners Inc., Greater Hartford counted 37.6 million square feet of retail-space inventory in 2017, 28,000 square feet more than in 2016. But store closings and retail bankruptcies, KeyPoint said, have dampened the Hartford market's ability to absorb some of its empty space, particularly floor plates ranging from 50,000 to 99,999 square feet, putting the area's retail vacancy at 11.1 percent — same as a year earlier. Hartford's retail vacancy peaked at 13.1 percent in 2013, KeyPoint said. Leaders in the Hartford region's retail- space expansion this year have been discount household goods and fashion re- tailers, healthcare and fitness facilities and phone-service outlets, KeyPoint said. Ruby Tuesday restaurant and electronics retailer Radio Shack are among chains that in the past year shut locations in the region. Opportunities arise The expanding retail rift has created new opportunities for non-traditional product and services providers to occupy choice real estate, area retail leasing spe- cialists said. In downtown Hartford, for example, Kathy's Urgent Care has leased the 6,700-square-foot, streetside retail space at 751 Main St. for its newest walk-in clinic to open in early 2018. CVS vacated that space last summer to relocate across the street to the ground floor of the 777 Main St. high- rise apartment building, joining Blue State Coffee. That property, too, has been a retail magnet, lately adding an Indian restau- rant and a barber shop to its adjacent and nearly full retail annex-parking garage that also houses Camera Bar, Greenway Market and Subway. "We've found that if you open some retail that's attractive to people downtown these businesses are thriving," said 777 Main landlord Bruce Becker. Dr. Thomas Brown, Kathy's founder and chief medical officer, said in addition to clinics in retail centers in Rocky Hill and Wethersfield, he also is shopping for potential sites in several other suburban Hartford communities. Hartford Health- Care and St. Francis Hospital and Medical Center, too, have been pushing more of their outpatient-care facilities into subur- ban retail settings. While a typical Kathy's urgent-care facility is sized about 3,700 square feet and costs around $1 million to build out and equip, the downtown Hartford one, be- cause it's larger, will cost about $1.6 million, Brown said. With its corner location, the new outpost likely will draw more "walk- by'' traffic than drive-ins. "It's going to provide a huge service to downtown Hartford,'' Brown said. AFC Urgent Care also has several franchise office sites in Greater Hartford, including one of its newest in Vernon. West Virginia-based MedExpress has a pair of Connecticut loca- tions in Meriden and Derby, and seeks more Retailers' Dilemma Unsettled future of brick-and-mortar retail sets a mixed table for area landlords, tenants PHOTO | BILL MORGAN Mark D'Addabbo, co-founder of New England Retail Properties Inc., has built all of Connecticut's Tractor Supply stores, including this newest one at 815 Newfield St. in Middletown. Top Expanding Retailers in Greater Hartford KeyBank JumpOff (trampoline park) Dollar General Planet Fitness Weekend Furniture Mart TJ Maxx Pet Smart Cardio Express Source: KeyPoint Partners LLC Greater Hartford Municipalities with Highest Retail Vacancy Rates East Windsor 24.6% Enfield 19.5% East Hartford 18% New Britain 17% Hartford 15.2% Source: KeyPoint Partners LLC Greater Hartford Municipalities with Lowest Retail Vacancy Rates Newington 3.4% Rocky Hill 3.7% Farmington 5.8% Plainville 6.5% West Hartford 7.1% Source: KeyPoint Partners LLC

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