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Kinol defends Waypointe’s lack of retail

Unleased space in The Block at Waypointe, left.

NORWALK, Conn. – Retailers are seeking a critical mass of potential customers willing to get out of their cars in central Norwalk before they’ll commit to leasing space, Paxton Kinol told the Zoning Commission recently.

“There’s a need and demand for restaurants but the retail itself in downtown Norwalk struggles,” Kinol said, attempting to explain empty storefronts in the existing Waypointe development as he worked to win approval for changes to the plans for the Waypointe South Block, Pinnacle at Waypointe.

Zoners have not yet voted on the requests made by Belpointe Capital for its 4.6-acre West Avenue property between Orchard and Butler Streets, formerly Loehmann’s Plaza.

Kinol’s team is seeking approval for a seven-story, mixed-use development with 330 apartments, 61,482 square feet of residential recreation area, 55,598 square feet of non-residential space (retail, restaurant, iPic theater and health/fitness club) and a 942-space parking garage. The property was approved in 2016 for a six-story, 109,157 square foot mixed-use development with 76 apartments, 16,820 square feet of retail and a 303-space parking lot, some of it below grade, a revision from earlier approvals.

Pinnacle, in its previous incarnation as the South Block, was expected to house a Container Store and a Nordstrom Rack. Those retailers backed out and Kinol is seeking a Zoning amendment to allow a personal services facility to meet the square footage requirement for retail in the development, saying that he has LA Fitness and 24 Hour Fitness competing to rent the space. The square footage requirement is based on changes made by the Zoning Commission in October.

If there were stores that could have gone into the Loehmann’s Plaza and succeed, the previous owner would have just re-tenanted the building, Kinol told the Zoning Commission, responding to criticisms inspired by the emphasis on a health club, rather than the expected retail.

“All of the stores went bankrupt,” Kinol said on Aug. 14. “…We bought a basically empty shopping center four years ago, five years ago, whatever it was. We have tried to lease it for five years. We brought an application for another shopping center. We couldn’t lease it at any kind of rent that made any financial sense so we added 156 apartments on it and we tried to lease it. We couldn’t lease it and make a project that was economically viable. So, we are back with 330 apartments and we have saved 110,000 square feet of retail. We don’t make money on the retail. We make money on the residential. And we are doing the retail as something to do for the community and the city to make the place a better place.”

Commission Vice Chairman Louis Schulman said that he doesn’t see any neighborhood-oriented retail in Waypointe, other than the Chase Bank; although the complex was developed to create a neighborhood, little has sprung up to take advantage of the influx of residents other than restaurants. Commissioner Galen Wells asked why no one has opened a dry cleaners, and mention was made of a possible grocery store.

Kinol, as he has previously, blamed Belpointe’s investment partners in the existing developments.

A more happening spot at The Block at Waypointe.

“We have not been in control of Waypointe I for 24 months,” Kinol said. “The investors there have for whatever reason chosen not to sign a lease with Ben & Jerry’s (and CKO Kickboxing)… My job, as I tried to explain to you last time, is to bring outside investment into the city of Norwalk. Phase I cost $147 million, which means it was a little more than $50 million in cash. I personally don’t have $50 million in cash so we bring in an investor.”

Carmel Partners, a California company, put up the majority of the investment money for Waypointe I and “when the building is done they control what they do with the building,” he said.

Alex. Brown Realty Inc., a Baltimore company, in Belpointe’s partner in The Berkeley and Quincy Lofts, two Waypointe sister buildings, one on Orchard Street and the other at 500 West Avenue.

“My job is to get the buildings built, get them up and occupied. Once they are complete, the investors for the long term will control what they do with them,” Kinol said. “…The same is true for every major building built in the city of Norwalk. You are acting like this is some new surprise but you can’t name a building that is not currently in control of its investors. We create a business plan, we go build and execute on that business plan and then we turn the building over and they control it as they like.”

“There was a deal for a dry cleaner to move in on Merwin Street,” Kinol said. “The space was actually built, directly across from Bobby Q’s (BBQ). For whatever reason the investor there chose not to sign the deal with the dry cleaners.”

Asked about Kinol’s comments, Carmel Partners on Aug. 28 issued this statement to NancyOnNorwalk:

 

“We developed The Waypointe with our partner because we are very excited about the growth potential of this vibrant neighborhood in Norwalk, CT. The retail component of this project, branded The Block at Waypointe, has redefined the lifestyle of Fairfield County with trendy new restaurants and upscale retail and services, including Barcelona Wine Bar, Colony Grill, Sedona Tap House, Bobby Qs BBQ, Chase Bank, Endurance House, JC Salons and Pinot’s Palette. In addition to the new name, The Block at Waypointe launched a new website, along with on-site events, promotions and ongoing programming throughout the summer and fall.

“Carmel has hired a local retail leasing broker, Saugatuck Commercial Real Estate, to bring additional exciting restaurants and retailers to The Block. Saugatuck has extensive experience evaluating prospective retailers, and strives to create a thoughtful mix of businesses which complement each other and contribute to the success of their neighboring businesses. We are confident that The Block is creating a great retail environment that will benefit the tenants, the neighborhood and the broader Norwalk community.”

 

The Block at Waypointe launched this summer.

Kinol said previously that parking was an issue for potential retailers, who didn’t want potential customers to have to walk too far to find their businesses. The 942-parking space garage planned for the Pinnacle at Waypointe is said to offer more parking than needed for the planned residents and businesses there.

Belpointe had a signed lease with The Container Store, but the company has had no same store sales growth for three years and its urban stores to worse than its suburban stores, he said.

“They are selling boxes, basically,” Kinol said. “So, they need a big parking lot where you can pull up in a big SUV right to the front door and load boxed into you SUV. They told us a while ago that they could no longer go forward because they are no longer doing urban stores…. I would think that the Internet is going to kill that business in the near future.”

Belpointe wanted Nordstrom Rack but “they felt that there wasn’t enough retail in the neighborhood to come by themselves,” he said.

The company likes to have a Nordstrom Rack near a Nordstrom, and given that a Nordstrom is expected to be an anchor at The SoNo Collection, “I would expect somewhere in Norwalk for a Nordstrom Rack to appear,” Kinol said.

As far as grocery stores go, Belpointe made an offer to Stew Leonard’s but Stew Leonard’s declined, he said. There was an offer made to Trader Joe’s, as the store’s Darien lease was expiring, but Trader Joe’s elected to stay where it is.

“I would guess that maybe not a full grocery store but something like a Garelick & Herbs would be very successful in the neighborhood,” Kinol said.

Attorney Jacqueline Kaufman, representing Belpointe, defended the developer.

“It’s in their best interest to bring the best retail that they can to the remaining spaces,” Kaufman said. “They want to bring things here that will make their residents happy and that will also make people in the greater community happy and part of the activity within the through block and around the blocks. I think they are committed to delivering that. They don’t have those yet but there is a commitment to bringing the type of retail that will support and enhance the community of the development.”

Although Planning Commission members objected to the proposed health club, the development already has the right to open one, she said. The issue is how the square footage would be counted.

LA Fitness is so successful at its Main Avenue location that it wants to open another facility in Norwalk, Kinol said. 24 Hour Fitness is virtually identical; they compete nationally in the same way that CVS and Walgreens do, he said.

“The market is not saturated, in fact the market is so plum they feel this would be another great spot to grow,” Kaufman said, responding the Planning Commissioners’ statements.

Retail is struggling on West Avenue for the same reasons that Sears and Woolworth’s are gone, Kinol said.

“We need to kind of reinvent ourselves and we think we are doing a good job of reinventing Norwalk,” Kinol said. “If you walk on the city streets in the morning or after work, there are hundreds of people walking around that weren’t there five years ago. There are people going for bike rides and walking their dogs, and just active out in the community and spending the money in the community. We are just trying to make the next step and complete the vision we had in 2011.”

22 comments

Al Bore September 5, 2017 at 7:27 am

No more apartments, enough already traffic, traffic, oh and did I mention traffic. Let’s not become the transient city for the state of CT, which is the direction we are heading. Lets try to get people to invest in Norwalk to buy and build houses. Enough rentals!

Donna September 5, 2017 at 7:49 am

Paxton Kinol, you came to the City with a YP (Your Problem) in search of a favor. What is the motivation for the City Planning Commission to grant your wish to quadruple the number of apartments in your original proposal? The problems you describe–Container Store customers wanting drive up capacity–were known knowns when you got the original approvals in 2016. It is not the responsibility of the City nor of the Pllanning Commission to make sure your development is a success. That’s 100% on you.

Nora K King September 5, 2017 at 9:27 am

There were successful retailers in the location when they had to leave due to the starting of construction. The Gap was there and Stark carpeting. Loehman’s was going out of business but that was nationwide after years of mismanagement.

Norwalk as a city needs to look at what is good for us within 5 years, 10 years and 15 years. Etc. As Paxton has said vocally this is about his bottom line. As a developer, he makes less off the retail space than the rental units. He should have factored all of this is at the start of the project. The city has been very accommodating for all of his requests. Just not this one.

What I don’t hear from Paxton is what he gives back to the city of Norwalk? This is all based on what is going to work for him. There has been a lot going on in Norwalk to get people moving around. We have Avalon, we have all that Norwalk hospital has done, we have the retail establishments along that street and restaurants, the Pilates Studio etc. We have Redevelopment working on several planning projects for this corridor along with several others. Planning should be determining what happens in these areas.

Norwalk needs to do what is right for our city and developers should not be allowed to constantly change our zoning regulations. Paxton has done this perhaps ½ a dozen times or more. We need a strong city planner who lays out what the vision is for this city. In my opinion it isn’t just apartments, apartments and more apartments! It is a strong mixed used community that thrives in all different economic climates. Economic climates change and if you build so that the usages can flow with the changes the city succeeds. We need to learn our lesson from POKO and not let the developer continue to drive what our city is going to look like. We have determined we want mixed use as a city and that is what we should stand behind.

Al Bore September 5, 2017 at 10:27 am

Correct Nora!! We have to stop doing what is good for the developers pockets and do what is right for Norwalk now and in the future. We need smart development that won’t cause over development, something the city of Norwalk is not good at. We need someone in city planning that knows what they are doing, and we do not have that person in place as of now. Stop the over development, and for goodness sake stop the apartments already. The city is already bursting at the seams and Norwalk’s infrastructure can’t take anymore! The developers are governing our city not our elected officials.

Andrew September 5, 2017 at 11:33 am

This is very interesting. The common thinking that has been pushed over the past few years is that MultiUse developments such as this are vital to the resurrection of urban cores such as Norwalks. But 3 major projects underway (or paused in one case) spell a different picture. The Mall has claimed that adding residential doesn’t work for them. While Waypointe is now claiming the opposite. PKO is such a basket case that obviously no one wants to touch that, or another developer would be working on that by now. All the while there is push to help out these developers by reducing the property tax burden for a period of time. What worries me, is if that is done, when the time comes for the taxes to increase the attorneys have a built in case on why the valuation of the property should be reduced – thus lowering the tax obligation. I have never paid much attention to the central planning argument – but its becoming clear that we will setting up a situation where the mythical increase in the Grand List will not happen. This is only going to increase the burden to the single family homeowners – who it is becoming clear are about to get whacked hard by Hartford pushing their problems on the the towns.

This could spiral out of control very quickly unless navigated VERY carefully.

Missy Conrad September 5, 2017 at 12:18 pm

Thanks to our Aunt Sally & Uncle Harry’s giving us an interest-free loan towards the down payment, Jeff & I were able to buy our first home in Norwalk in 1971. One still has to earn quite a high salary or be blessed with generous relatives to purchase a house today; further, land for new building is scarce. As Governor Malloy & his new Commissioner of Housing pointed out, building affordable housing had been neglected in Connecticut for almost 30 years (while the human population has been growing exponentially & the demographics of families living together has changed). Apartments are needed for young people, for those who want or need to live independently & for those who cannot afford to buy a home. And, how about amending Norwalk’s second-floor requirement for new buildings to encourage them to be apartments rather than storage or empty?

Michael McGuire September 5, 2017 at 2:54 pm

I agree with Andrew on the need to navigate this correctly. But to do so will require the right questions be asked and the right research conducted to answer those questions. Getting waylaid by personal issues and limited data is not a great way to address next steps.

Regarding retail – the entire retail landscape is in a period of rapid change as we all know. It’s pretty clear that that was not the case when Waypointe was envisioned. My firm regularly does a portfolio valuation of 25 +/- retail centers around the United States every quarter and have been doing this for well over 5 years. This has required us to keep close tabs on what’s happening in this market segment and why.
So what’s my take on this? Paxton is not a fault for the box retailers (Container, Nordstrom Rack,etc.) pulled out of Wayponte because Waypointe is a secondary retail location better suited to catering to neighborhood convenience retailers. He is just reacting to the marketplace. Changing course mid-stream in the real estate industry is often required for success. What worked a year ago may not work today.

Case in point – almost every big box retail that I know of has been reassessing their market position and scaling back from secondary location to focus on prime retail locations. This has all happened in the past 2 years. We are seeing this across the country – it’s not specific to Norwalk.

The question is how do we best deal with this changing marketplace? Start by understanding that in all change there is opportunity for those who take the time to ask the right questions and do the work required to find the answers.

Let’s start with the easy one first – apartments – how much is too much? First you have to ask – of what kind of apartments? Clearly the Waypointe style apartments have a much different impact on Norwalk than say the large number of illegal apartments located here.

So start with fundamentals – Norwalk needs to grow the Grand List. I’m pretty certain, from a professional standpoint, that a Waypoint apartment contributes much more to the local economy, and hence the grand list, than does an illegal apartments subleasing rooms to (in some cases entire families). The latter is generally a drag on the local economy and a burden on local taxes and services.

One suggestion might be to police up the illegal apartments (which would grow our grand list all the while reducing the total number of apartments). Next suggestion might be to see what the average Waypoint apartment contributes/costs to the local economy. If it’s positive build, it not then don’t build. But make sure there is sufficient demand.

Norwalk has made to many knee-jerk reactions in the past. Follow Andrew’s advice and navigate this correctly, it’s not hard. Just keep and open mind and ask the right questions.

Bryan Meek September 5, 2017 at 4:21 pm

Take a ride by the Norwalk reservoir today and tell me with a straight face that we need more apartments. When the POKO / Tyvek building rots eventually we should replace it with a surface lot and end this insanity of stretching our finite resources beyond their means.

Michael McGuire September 5, 2017 at 4:41 pm

Bryan – Better to reactive the Wall Street Train Station and turn downtown Norwalk into the hottest Transit Oriented Development are in lower Fairfield County. That would maximize our resources and add a lot of value to the Grand List.

Time for Norwalk and CT to stop think about “getting my slice of the pie” and instead start making the right kind of room for “all the pies in the oven” that need counter space.

Donna September 5, 2017 at 5:13 pm

The “if we build it, they will come” approach to residential development in the absence of a master plan is a risk that Norwalk cannot afford to take right now.

Rick September 5, 2017 at 7:07 pm

no one ever talks burden upon city services.

police up the illegal apartments, shut down the redevelopment agency.

Debora Goldstein September 5, 2017 at 8:00 pm

Agree with Andrew. Very good points about the profitability being in the eye of the developer. I still have not seen anybody answer the question about the occupancy of the residential units in Waypointe, never mind the retail spaces. It would seem that the customer base for the retail in that area would come from those apartments, if they were actually all occupied. Could it be that retail is no longer competitive now that the mall is adding a million square feet of retail to the marketplace?

Developers (and the City) need to ditch the latest buzzword. You may not call a neighborhood vibrant if there is nothing driving people to be there..ie empty retail storefronts. Vibrancy is a function of activity of PEOPLE, not buildings.

Lastly, a word on the category of fitness centers. Every developer, including the mall, is insisting on being able to categorize this as retail, despite the saturation in this category in Norwalk. Want to know why? This is the only commercial category that looks like retail, but doesn’t rely on foot-traffic and in-store traffic to make their money. They are most profitable when members sign up and DON’T use the facility.

You want vibrant, local mixed use retail, fill them with LOCAL business owners plying services people need (instead of chain stores). Dry-cleaners, barbershops, printshops, accessory outfitters, newsstands, specialty book-sellers, art studios, boutique clothing, jewelers, shoe repair, professional services, etc.

Sue Haynie September 6, 2017 at 7:16 am

@Michael McQuire makes excellent points.

Changing course mid-stream in the real estate industry is often required for success. Go take a look at the empty retail in, of all places, downtown Westport. Demands are changing, businesses need to adjust.

The apartments and retail on West Avenue are a positive for Norwalk, bringing in taxes and people on a stretch of road that, for decades, was primarily a drive-by destination on the way to someplace else.

Nora K King September 6, 2017 at 9:15 am

Andrew and Mike – are both right. We need to keep valuations in the front of our discussions in this next election. This is why city planning is so important. Retail has changed drastically in the past few years. However, when you look at areas where retail is growing it is in areas like Norwalk. The point that needs to be addressed is that by doing mixed use we are planning for the future. The reason retail isn’t working even in towns like Westport is the greed of the developers. Perhaps if we started taxing the developers on the price per square footage on there taxes it would balance out.

Also – someone made a comment on young folks need apartments. Do you think young folks can afford Waypointe?

Concerned September 6, 2017 at 9:32 am

We need another fitness center in Norwalk like we need another liquor store warehouse. There have to be other options that can benefit the residents of Norwalk and help increase foot traffic. That said, Waypointe is an odd area. It’s located right off of an extremely busy four lane road with the sidewalk the only thing between the road and buildings. Empty store fronts are lit up at night so you see the unfinished spaces, exposed wires and bright pink insulation. A complete eyesore.

I think Norwalk is once again scrambling to fill space that wasn’t well thought out, and the last thing we need is more apartments to fix the goof.

Michael McGuire September 6, 2017 at 12:42 pm

Nora,

Young people can certainly afford Waypointe. The lower Fairfield County area is seeing a resurgence of millennial workers relocating here following the digital media jobs created by a host of small and large businesses in this industry. These are the jobs CT will need to expand upon to have any hope of an economic turnaround for the State.

The reason these jobs are locating here is the NY metro area’s long history has a media hub. Think of it this way (very simplified) – San Francisco creates the technology, Boston refines it and makes it usable, Austin expands the social media aspects, and NY creates the screen based digital content the end user (us) see. Digital media is a the hottest office market in NYC office space now. It’s what’s driving the Brooklyn and other boro real estate markets.

Right now lower Fairfield County is one of the lowest price alternatives for small digital media business in the tri-state region. We also have a very good train system which is essential to attracting both businesses and their much needed computer-skilled millennial workforce.

And those highly skilled millennial workers want to locate into live-work urban areas like SoNo and Downtown Stamford – older downtowns with a cool factor and access to a train station.

The current problem is that the office market for these digital companies is tight. There is only so much older urban downtown area to go around, and not enough older urban neighborhoods by train stations. The vacancy rate for downtown Class C office space in SoNo is sub 10% while downtown Stamford is sub 5%, both of which reflect very strong sub-markets.

SoNo has a bit higher vacancy rate since walking access to the train is not as favorable as it is from downtown Stamford. Sidebar – it’s very difficult to near fiscally impossible to create small office space (less than 1,000 SF in size) from larger Class A and B office buildings).

This is the major reason why I’m in favor of re-activating the Wall Street Train Station. The tech/media industry which is propelled forward by small innovative companies needs more space in lower Fairfield County in urban downtown areas accessed by a train. Outside of downtown Stamford there is no area seeing more apartment development than within a 1/2 mile of Wall Street. If you are worried about too many apartments here solve the problem by re-activating the train station on Wall.

The mid and long term economic benefits are enormous and certainly Norwalk could use that right about now.

Donna September 6, 2017 at 4:06 pm

Is the Waypointe a good value for renters? I have heard from workers on the project and from former tenants that this development is poorly constructed. Whether that’s Kinol’s failing due to greed or the City’s due to lax oversight is another story.

Nora K King September 6, 2017 at 7:34 pm

Mike,

I am not against the Wall Street Train Station. I am for it.

However, I don’t think retail is dead. I think in vibrant urban areas it is thriving. Poorly managed retail is dead. Developers and landlords get greedy. They need to focus on the profitability on the residential and provide affordable missed use space to help create a robust area that people want to play, live and work. The newest rendition of this project does not provide that.

Retail is not dead. Amazon certainly doesn’t think so. They are buying brick and mortar locations or partnering with them. The bounce on Kohl’s stock is because they are now partnering with Amazon to provide in store boutiques. What is dead is landlords charging crazy rents that cannot be sustained. Amazon is investing more and more in actual physical locations.

All those luxury apartments are not being leased by young single millennials – they are being leased by couples, roommates, divorced folks, empty nesters and families. Perhaps when that area is filled with mixed use the younger people will flock. But you are right – we need better public transportation and better parking.

We need to partner with developers who want a win win on both sides. We want developers to thrive but we want our city to thrive not just now but into 10 or 15 years into the future. I love Norwalk but Norwalk has a long way to go.

Donna September 6, 2017 at 8:21 pm

Macy’s recently hired ebay senior exec for North America Hal Lawton to overhaul its store offerings. If Macys and its competitors offer basically the same merchandise, the only way to increase market share is to cut prices. I hope Lawton pans out for Macy’s for all kinds of reasons that are relevant to Norwalk. In terms of making retail successful on West Ave, Kinol needs to think outside the big box. People will shop in person for things they cannot buy online, Etsy being a quirky exception. Handmade, niche, and hard-to-find items have great retail potential. People will shop in person for niche fragrances and cosmetics, for instance. The Palais Royale in Paris is a standout example of retail tailored to walkabout shoppers looking for a sensory experience–something the internet can never provide. Breweries and distilleries are another area of potential growth for Norwalk, with ample space for both production and tasting rooms with either attached kitchens, food trucks or collaborations with local eateries (Single Cut in Queens). However, these potentially popular retail opportunities are limited by the high rents developers like Kinol would like to get. Maybe retail developers should be seeking out the next Single Cut, NEBCO, Serge Lutens, Rituel des Filles, Matt & Nat, or Journelle. And Norwalk, for its part, should consider seizing its place as a seaside tourist destination and offer more for visitors than the fabulous Maritime Aquarium to lure in vacation dollars. I’d vote for more mini golf and soft ice cream.

Al Bore September 7, 2017 at 7:54 pm

Stop the apartment transient city madness city hall and the developers are trying to turn Norwalk into! Smart development is what we need not dictated by the developers that couldn’t care less about Norwalk and only care about their bottom line.

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Nancy came to Norwalk in September 2010 and, after reporting on Norwalk for two years for another company, resigned to begin Nancy On Norwalk so she engage in journalism the way it was meant to be done. She is married to career journalist Mark Chapman, has a son, Eric (the artist and web designer who built this website), and two cats – a middle-aged lady and a young hottie who are learning how to peacefully co-exist.