the Chamber, along with Middletown Mayor Sebastian Giuliano and Trevor Davis Commercial Real Estate, will hold a press conference to discuss the 2009 First Quarter Greater Middletown Real Estate Report. The press conference will take place on Thursday, July 2 at 3:00 p.m. at the Mayor’s Office, 245 DeKoven Drive, Middletown.
A slower pace has come to the commercial real estate market in Middletown and Cromwell due to the national and international recession, but there is still a healthy balance of supply and demand. Availability rates have risen in general only slightly, but in some cases have indeed gone down. The commercial markets are clearly healthier than the residential, although the unavailability of attractive lending terms is beginning to have a chilling effect on new and existing commercial sales.
Notably, Downtown Middletown Class A vacancy is only 7.1%. This is usually a sign that there is an undersupply, almost astonishing given that Downtown Middletown is probably the only city in Connecticut where there have been two new competitive buildings built, albeit small. Both of these are mixed use with retail on the street level and office space on the upper floors. Class B and C rates are understandably somewhat higher, but the overall availability rate in Downtown Middletown is only 9.1%.
The Renaissance continues in the Downtown with the addition of live music to the restaurant mix. The new projects are occupied as the newest one is announced, a new, ‘green’ building in the North end of Main St. for the Community Health Center.
Suburban office space is closer to, but still lower than the larger Hartford and New Haven markets. Middletown is measured at 11.4% and Cromwell 15.2 % compared to the larger cities rates measured by different firms between 15% and 19%.
The industrial availability rates of Middletown are slightly higher than we measured previously, but still quite healthy at 8.5% compared to Hartford and New Haven’s 9% to 13%. For this Report we removed a Cromwell building that has been unavailable for occupancy for over 5 years due to the environmental liability, thereby bringing the vacancy rate for industrial buildings in Cromwell down below 3%.
Due to the economy and the perceived distress in the market, rental rates and sales prices per square foot are being challenged by tenants and buyers. So far, the landlords and sellers have had little justification to lower them, but continued pressure will force the most motivated to lower their rates.
We should note that, because of its size, we have treated the Aetna health insurance building as an owner occupied structure, even though it technically isn’t. They intend to vacate this 1.4 million sq. ft. office complex sometime in 2010. The owners are currently evaluating the reuse potential, although it is unlikely to become a multi-tenant building.
This is the first time we have made public the historical rates for our Reports. Due to the evolution of the research data, the only group that presents a true and interesting perspective is the Middletown and Cromwell office market. Most of the noticeable jumps occur when a building is classified differently, such as the hospital purchasing a competitive building that would therefore be removed from our calculations.
However, the trend lines clearly follow the economy of our State and nation. Although upper Middlesex County is relatively small there is a vibrancy that visitors notice in Downtown Middletown. A return to the cities is a global trend, but Middletown far surpasses most cities. This attractive Downtown has blossomed from fruits of long efforts by the City, the Chamber, Downtown Business District, Wesleyan University and many businesses and individuals.
PDF with full data available at: