Consultants: Norwalk rental availability is ‘fairly stable’

NORWALK, Conn. – Residential space is the strongest real estate market in Norwalk, according to a consulting firm.

“The Norwalk market is attractive, in general, to residential development. Of course, you’re seeing a lot of it in the city… It’s attractive to prospective residents because it is one of the cheaper places to live in the region. That is driving some of the population growth and residential development. That being said, because the rents are lower and the median home prices are lower it makes for a very unique development profile,” Francisco Gomes of Fitzgerald & Halliday said at the Manresa Island study outreach session last week.

Fitzgerald & Halliday has been hired by Norwalk and the Manresa Association to study possible uses for Manresa Island. Residential housing is the most viable development for the 125-acre island, but it’s possible that some hedge fund might think that it would be great to put 500,000 square feet of office space out there, Gomes said.

“What we need to do… is decide if that’s a reasonable use of property,” said Gomes, who qualified his remarks by explaining that he was speaking for a colleague who could not make it to the event.

Norwalk would need to approve any possible conversion of the property but NRG owns the island and its decommissioned power plant; NRG reps attended the session but the company shows no sign of moving forward with a different use.

Norwalk’s median home sales prices have been fluctuating for a while but are overall flat, he said.

“It’s not a really robust growing residential market, it’s more of a stable residential market,” Gomes said. “Trends over one year show an actual drop but still within a fairly tight range. There’s no discernable trend over a period 5 years.”

There’s an 8 percent drop in median home prices, according to the PowerPoint presentation.

“Rental market conditions show very little 1/BR2/BR rental product available,” the PowerPoint states, with approximately 1/3 of the rental market two bedrooms or less, and the available one- to two-bedroom inventory fairly stable.

A modest 3 percent increase in population is projected, the PowerPoint states, explaining that although young adults are leaving, older people are moving in.

“This is true in just about every community we work. This is the segment, or the cohort, that has the strongest demand for housing – in Connecticut, at least. We are losing our younger population,” Gomes said.

Even so, there’s growth in employment and employers, with 3,000 jobs added over the last six to seven years, he said.

Norwalk’s employment has grown 6 percent since the recession, and 200 firms have been formed here, the PowerPoint states.

The job growth is in finance and insurance, while management of companies and enterprises has been shrinking, he said.

“Your local economy is growing to some degree,” Gomes said.

There’s a substantial amount of commercial space available in the region, the PowerPoint states, listing 345 availabilities. New office space isn’t likely as construction would require rents of more than $28 a square foot.

“You are oversupplied, for the most part, with retail,” Gomes said. “Basically meaning, for the money that you have as residents to spend, versus the retail establishment that you have, there’s only one sector where you …  just don’t have enough venues to spend your spending potential, and that’s food services and drinking.”

“Everything else, you are basically oversupplied. Which means people come here to spend money,” Gomes said.

“New retail would need to find specific market niches and runs the risk of cannibalizing existing retail,” the PowerPoint states.

Therefore, the PowerPoint states, residential is the mostly likely reuse of Manresa Island, although, “this analysis does not preclude a curated, targeted development either as a build to suit office situation or some other unique development idea brought forth by a developer.”

Manresa PowerPoint excerpt