COMMERCIAL AND RESIDENTIAL MARKET ANALYSIS FOR THE CITY OF NORWALK, CONNECTICUT

MARCH 2006

Prepared for:

City of Norwalk Redevelopment Authority 125 East Avenue Norwalk, Connecticut

Prepared by:

RKG Associates, Inc. Economic, Planning and Real Estate Consultants 277 Mast Road Durham, New Hampshire 03824 Tel: 603-868-5513 FAX: 603-868-6463 And 300 Montgomery Street, Suite 203 Alexandria, Virginia 22314 Tel: 703-739-0965 FAX: 703-739-0979 Economic Planning Web: www.rkg1.com and Real Estate Consultants Norwalk, Connecticut - Retail and Residential Market Analysis March 2006

TABLE OF CONTENTS I. Executive summary ...... 1 A. Key Findings ...... 1 1. Demographics...... 2 2. Retail Market...... 2 3. Office Market ...... 2 4. Residential Market ...... 3 B. Conclusions...... 3 1. Retail Development Potential...... 4 2. Residential Development Potential...... 4 II. Demographic indicators...... 6 A. Demographic Conditions...... 6 1. Population ...... 6 2. Population by Age ...... 6 3. Households ...... 7 4. Household Income ...... 8 5. Race and Ethnicity ...... 9 6. Conclusion...... 9 B. Housing Characteristics and Trends ...... 10 1. Housing Tenure and Occupancy ...... 10 2. Building Permit Trends ...... 11 3. Conclusion...... 11 III. Retail Market Indicators...... 12 A. US Census of Retail Trade...... 12 1. Sales...... 12 2. Store Count ...... 13 3. Sales Productivity ...... 14 4. Comparative Market Shares...... 16 5. Conclusion...... 16 B. Shopping Center Inventory...... 16 1. Broker Interviews ...... 20 2. Conclusion...... 20 C. Consumer Demand and Sales ...... 21 1. Demand ...... 21 2. Sales...... 22 3. Conclusion...... 23 D. Sales Leakage and Supportable Retail ...... 23 1. New Households...... 24 2. Conclusion...... 24 E. Retail Inventory – Norwalk Assessor...... 25

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IV. Office Market Indicators ...... 27 A. Office Market Overview...... 27 1. Norwalk...... 28 B. Broker Interviews ...... 29 1. Conclusion...... 29 V. Residential Market...... 30 A. Condominium Market Indicators...... 30 1. Recently Approved or Pipeline Projects...... 30 2. Sales Volume...... 30 3. Median Values ...... 32 4. Comparable Condominium Properties...... 34 5. Conclusion...... 40 B. Modern Rental Sector ...... 41 1. Recently Approved or Pipeline Projects...... 41 2. Pricing and Availabilities ...... 41 3. Conclusion...... 44 VI. Appendix...... 45

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I. EXECUTIVE SUMMARY RKG Associates, Inc., a professional real estate and economic development consulting firm has been retained by the Norwalk Redevelopment Agency, of the City of Norwalk, Connecticut, to prepare an independent and impartial analysis of the City’s capacity to absorb additional retail, residential, and to a lesser extent, office space in terms of new properties, projects and square feet (SF) of development over the next several years.

The need for such an assessment has arisen, in part, because of several proposed redevelopment initiatives and projects pending before the City. Included among these projects are two downtown, urban core projects, referred to as the West Avenue Corridor and Reed Putnam. As of the date of this research, proposed redevelopment for these downtown projects is as follows:

ƒ West Avenue Corridor – proposed new development to include 400,000 SF of retail development, 75,000 SF of office space and approximately 350 residential units.

ƒ Reed Putnam – proposed new development to include 215,000 SF of retail space, 500,000 SF of office space and approximately 300 residential units.

This analysis reviews trends and baseline data for the City of Norwalk and surrounding regions, with respect to demographics, real estate market indicators (for retail, residential and office), and retail/consumer spending demand and sales activity. Recent and pending real estate development activity, from primary in-field analysis and from interviews with real estate brokers, developers and local officials, was also obtained in order to develop an estimate of the City’s potential to absorb this, and other, proposed development.

It should be noted that the purpose of this report is to provide an analysis of Norwalk’s capacity to absorb additional retail, residential and office space in terms of new properties, projects and square feet (SF) of development over the next several years. This analysis neither addresses issues relative to the construction phasing of any proposed new development at each respective development location, nor does it recommend, propose or advocate any respective development program. Finally, this report does not present any information or analysis relative to the fiscal impact (municipal service costs and tax and non- tax revenue) of any proposed development. A. Key Findings The key findings of this research and analysis are presented and summarized next. The more detailed analysis is presented in other sections of this report.

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1. Demographics Based on the demographic estimates analyzed, Norwalk has experienced overall population growth since 1990, particularly in important age cohorts such as middle-age families (35 to 54), near senior (55 to 64) and seniors (65 and over). In addition to the changing age structure of Norwalk, the city’s Hispanic population has doubled between 1990 and 2005. The increase in middle-age and older residents, along with an increasing Hispanic population, has implications for local retail establishments as well as the local housing market. For example, residents in the middle-age family cohort are typically at their peak earning potential during this time and generally spend this income on local goods and services. Also, near senior and senior households typically desire to downsize from larger homes to smaller, more maintenance-free units. Additionally, it should be noted that the demographic changes experienced in the past might not necessarily continue into the future – which may be the case relative to Norwalk.

2. Retail Market The overall growth in retail sales (1992 to 2002), as well as the average sales per store in the City of Norwalk, indicates an increasing strength in the retail market. More particularly, many selected store types in Norwalk serve a broad geographic area, indicating a regional draw and/or a retail magnet (destination) upon which future retail development in Norwalk may capitalize. Despite this strong competitive position, there remains a substantial amount of sales leakage, or unmet local demand, for a variety of retail goods and services. In other words, there is consumer demand among households in Norwalk that is not being met by the local retailers and merchants in Norwalk.

Retail sales (excluding automotive/gasoline and non-store purchases) in Norwalk are estimated to exceed $1.32 billion in 2005. However, this analysis also estimates that there is slightly more than $371.0 million in local retail demand that is “leaking” out of Norwalk, i.e., residents are shopping elsewhere. This sales leakage, from existing residents and households in the Norwalk market, is estimated to increase to nearly $427.0 million by 2010. Retail sectors exhibiting significant sales leakage include apparel/accessories, department store goods, furniture/furnishings and dining/drinking.

3. Office Market There have been several previous studies and analyses of the office market sector in Norwalk and in Fairfield County as a whole. These studies have indicated that while there are recent signs of improvement in leasing activity in Norwalk, much of this activity has come at the expense of other office developments throughout Fairfield County. Despite improving leasing activity, there also remains an ample supply of office space, although perhaps somewhat limited with respect to smaller blocks of space (under 20,000 SF, approximately).

Local brokers indicated that, in their opinion, any significant new inventory of office space in Norwalk, unless pre-leased or as end-user space, could put pressure on lowering lease rates and asking rents. As such, while new office development in the City, and at either of the proposed West Avenue Corridor or Reed Putnam redevelopment sites, may be an appropriate use; it should be considered as a support use to an otherwise mixed

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development, rather than the primary focus of redevelopment and new building square footage.

4. Residential Market Norwalk is currently the focal point of condominium development activity within the primary market region1 (PMR), with over 180 units currently being built. Real estate agents and brokers indicate that units in these new developments are selling at an average rate of five to ten units per month per development with many developments being 50% pre-sold before construction is complete. Based on an average absorption of five units per month per new development, evidence suggests that the 864 units contained within twelve condominium developments currently within the permitting pipeline would be absorbed in about 14 months2.

Norwalk’s recent condominium market activity is not indicative of past activity (prior to 2000) with recent upturns in pricing (increasing at 16% per year since 2000) and volume (increasing at 5% per year since 2000) clearly showing that Norwalk is a desirable destination for condominium buyers. This notion has been echoed by recent transaction activity as well as many brokers who indicating that Norwalk has an advantageous location relative to transportation infrastructure (I-95 and commuter rail), as well as more affordable price points (compared to other PMR communities and those within the New York City MSA).

The rental market in the region experienced expansion in the last few years, and new construction continues. All of the development activity in the region has taken place outside of Norwalk; however, the approval of 136 units in Norwalk (to be completed in 2007) reverses this trend. These modern projects establish new standards in rent levels for the region, as exemplified by two-bedroom rents ranging between $1,500 and $3,460 per month, and three-bedroom rents peaking at $4,500 per month. Rental concessions such as two months rent-free are also evident at some developments. Occupancy rates are reported in the mid-90% range at many of the developments suggesting strong demand.

In the primary market region, another 400 rental units are reported in the pipeline, which represents about 90% the amount constructed in the last few years. However, while development activity over the past few years has been primarily outside of Norwalk, this trend will reverse. These pipeline projects, when added to the supply of units currently under construction (or approved but not yet built), suggest a supply of more than 520 units. B. Conclusions The conclusions of this analysis are summarized next, with respect to Norwalk’s capacity to absorb additional and/or proposed retail and residential development.

1 The primary market region includes Norwalk, Darien, New Canaan and Westport. 2 Assuming the units were built and available for immediate occupancy.

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1. Retail Development Potential An expansion of the retail offerings and venues in Norwalk could serve to recapture a portion of the estimated $427.0 million (2010) in sales leakage from current households within the City, which conservatively (ranging from a 30.0% to a 50.0% recapture rate) is estimated to support an additional 317,000 SF to 528,500 SF of retail development in the City. To the extent that actual rates for recaptured sales leakage are higher than the range established in this analysis, this then would result in the potential for additional development of new retail venues and square footage.

Additionally, this analysis estimates that every 1,000 new households to the Norwalk market area would result in an approximate additional $25.0 million in consumer spending demand. Some of this demand would likely be spent at existing merchants and businesses in the City, but it is also estimated to support an additional 45,000 SF to 58,000 SF of new retail development.

The retail market indicators in Norwalk would largely support new retail development and new stores in the West Avenue Corridor and Reed Putnam redevelopment areas. A recapture of sales leakage from existing households in the Norwalk market is estimated to support 317,000 SF to 528,500 SF of new retail development. If the estimated additional 1,500 households (as presented in the residential section of this analysis) were absorbed over the 2006 to 2010 time period, this would support another 67,500 SF to 87,000 SF on new retail development. As such, recaptured sales leakage from existing households, and sales potential from new households, could result in an additional 384,500 SF to 615,500 SF of supportable new retail development by the year 2010.

These represent the conservative and slightly more aggressive estimates of additional supportable retail development. The more reasonable estimate likely is somewhere in the middle, indicated by 422,800 SF of new retail development as supported by recapturing a portion of sales leakage, and an additional 77,000 SF from the new 1,500 households. As such, total estimated additional supportable retail development in the City of Norwalk (to the 2010 time period) is just under a half-million square feet, at 499,800 SF.

2. Residential Development Potential With Norwalk currently capturing 86% of condominium sales within the PMR, and very little (if any) developments currently within the permitting pipeline in the other PMR communities, it is unlikely that the other PMR communities will present any future competition to Norwalk relative to condominium development activity. Furthermore, barring any significant rises in interest rates, or unforeseen catastrophic economic conditions, the demand for condominiums in Norwalk should remain strong over the next one to three years.

Similar to Norwalk’s condominium market, the demand for high quality apartment units (in terms of interior and development amenities) located close to employment centers and/or transportation corridors (both rail and highway) is outpacing the current supply.

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As shown in the following Summary Table, including the proposed 650 units at the two development sites within Norwalk’s existing condominium permitting pipeline, the pipeline increases to over 1,500 units. Based on recent historic absorption of about 150 new units per year, the pipeline represents approximately ten years of supply. However, based on sales in condominium projects that are currently under construction, this pipeline may represent approximately five years of supply (including permitting and construction time).

Summary Table - Norwalk Condominium Market Absorption Estimate Units in Pipeline 864 Proposed Units at Development Sites 650 Total Pipeline and Proposed Units 1,514 Estimated New Units Sold in 2005 150 Slow Track Absorption Period [1] 10 Years Likely Absorption Period [2] 5 Years [1] Based on historic absorption trends [2] Based on current sales activity

The overall residential market is viable in Norwalk primarily due to locational and price point advantages. The viability of the residential market is such that both the West Avenue Corridor and Reed Putnam sites could support the approximate 650 new residential (both owner occupied and renter) units as per each site’s proposed development program.

Based on historical absorption (about 130 units per year), current significant demand and increased pipeline activity (about 720 units per year), the 650 condominium units proposed for both development sites could be absorbed within five years.

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II. DEMOGRAPHIC INDICATORS A. Demographic Conditions This section presents an overview of demographic conditions in the City of Norwalk, the primary market region (PMR – which includes the communities of Darien, New Canaan, Norwalk and Westport) and Fairfield County. Selected demographic trends regarding population (number and age), households, housing characteristics and building permits are presented.

1. Population In 2005, Norwalk had an estimated population of 84,326, which represents an increase of 1,375 residents (1.7%) since 2000 and 5,995 (7.7%) since 1990. In terms of percentage growth between 1990 and 2005, Norwalk population base growth lagged behind that of the primary market region (8.7% or 12,141) and Fairfield County (9.9% or 81,617). Table 1 shows population trends for Norwalk, the PMR and Fairfield County.

Table 1. Population Trends: 1990-2005 Norwalk Primary Market [1] Fairfield Co. 1990 78,331 138,882 827,646 2000 82,951 147,784 882,567 2005 84,326 151,023 909,263 # Change 1990-2000 4,620 8,902 54,921 2000-2005 1,375 3,239 26,696 1990-2005 5,995 12,141 81,617 % Change 1990-2000 5.9% 6.4% 6.6% 2000-2005 1.7% 2.2% 3.0% 1990-2005 7.7% 8.7% 9.9% [1] Zip code population estimates assembled for primary market region communities Source: DemographicsNow

2. Population by Age Table 2 shows age distribution trends for Norwalk, the PMR and Fairfield County between 1990 and 2005 for four age cohorts that are most typically considered homebuyers. These cohorts include young singles and couples (age 25 to 34), middle- age families (age 35 to 54), near seniors or empty nesters (age 55 to 64), and seniors (age 65 and over).

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Table 2. Distribution of Population by Age: 1990-2005 1990 2000 2005 % Change 90-05 Norwalk 25-34 16,820 14,644 11,879 -29.4% 35-54 20,821 25,816 26,304 26.3% 55-64 7,618 7,744 9,627 26.4% 65+ 9,893 10,601 10,923 10.4% # Change 90-05 Median Age 34.5 36.7 38.6 4.1 Primary Market Region [1] 25-34 24,346 19,645 16,375 -32.7% 35-54 40,494 48,324 49,143 21.4% 55-64 14,994 14,577 17,956 19.8% 65+ 17,943 19,545 20,037 11.7% # Change 90-05 Median Age 36.7 38.2 40 3.3 Fairfield County 25-34 141,429 118,076 99,216 -29.8% 35-54 229,308 278,178 285,655 24.6% 55-64 80,859 81,595 101,862 26.0% 65+ 110,066 117,163 120,958 9.9% # Change 90-05 Median Age 35.5 37.3 39.1 3.6 [1] Zip code population estimates assembled for primary market region communities Source: DemographicsNow

Between 1990 and 2005, Norwalk’s young single and couple population decreased by over 29%. Both the PMR (33%) and Fairfield County (30%) experienced similar declines in population within this age cohort. Between 1990 and 2005, Norwalk experienced an increase in its middle-age family population by over 26% - 5 percentage points more than the primary market region and almost two points more than the County.

Norwalk’s near senior population increased by about 26% between 1990 and 2005 – faster than the primary market region (by over 6 percentage points), but on par with Fairfield County (at 26%). Between 1990 and 2005, Norwalk’s senior population increased by 10.4% - similar to the growth in Fairfield County (10%), but behind (by 1.3 percentage points) the primary market region. Norwalk’s 2005 median age was 38.6, representing an increase of 4.1 years since 1990. The 2005 median age in the primary market region (40) and County (39.1) were slightly older than Norwalk’s, but increased at rates (3.3 and 3.6 years) below that of Norwalk over the same time period.

3. Households Based on estimates provided by DemographicsNow, Norwalk had a 2005 household base of 32,772 households, and increased by 2,211 households (7.2%) since 1990. Over 97% of the growth in households in Norwalk was experienced during the 1990s. During the 1990 to 2005 timeframe, household growth in the PMR increased by 6.4% (0.9 percentage points below that of Norwalk) with Fairfield County’s household base

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increasing by 8% (0.8 percentage points more than Norwalk). Table 3 shows Norwalk’s household growth trends between 1990 and 2005.

Table 3. Household Trends: 1990-2005 Norwalk Primary Market [1] Fairfield Co.

1990 30,561 52,776 305,014 2000 32,711 55,750 324,232 2005 32,772 56,129 329,567 # Change 1990-2000 2,150 2,974 19,218 2000-2005 61 379 5,335 1990-2005 2,211 3,353 24,553 % Change 1990-2000 7.0% 5.6% 6.3% 2000-2005 0.2% 0.7% 1.6% 1990-2005 7.2% 6.4% 8.0% [1] Zip code population estimates assembled for primary market region communities Source: DemographicsNow

4. Household Income In 2005, Norwalk had a median household income of about $65,900 - about $21,200 less than the PMR and about $6,700 less than Fairfield County. Between 1990 and 2005, Norwalk’s median household income increased by about 37% ($17,700), about 11 percentage points below the primary market region, and 8.4 points below Fairfield County. Table 4 shows median household income trends in Norwalk, the PMR and Fairfield County between 1990 and 2005.

Table 4. Median Household Income Trends: 1990-2005 Norwalk Primary Market [1] Fairfield Co.

1990 $48,187 $59,110 $49,960 2000 $59,826 $78,192 $65,347 2005 $65,926 $87,075 $72,573 $ Change 1990-2000 $11,639 $19,082 $15,387 2000-2005 $6,100 $8,883 $7,226 1990-2005 $17,739 $27,965 $22,613 % Change 1990-2000 24.2% 32.3% 30.8% 2000-2005 10.2% 11.4% 11.1% 1990-2005 36.8% 47.3% 45.3% [1] Zip code population estimates assembled for primary market region communities Source: DemographicsNow

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5. Race and Ethnicity As shown in Table 5, in 2005, non-white residents represent about 27% (or 22,600 residents) of Norwalk’s population base – about 9 percentage points above the PMR and 5 points above the County. Between 1990 and 2005, Norwalk’s non-white population base increased by about 39% - about 11 percentage points below the PMR and 19 points below the County over the same time period.

All three geographies have experienced a significant increase in the number of Hispanic residents between 1990 and 2005; however, Norwalk has experienced the most precipitous increase. Over the time period, Norwalk’s Hispanic population has more than doubled (increasing by almost 7,500 residents), while the PMR increased by over 95% and the County by 73%.

Table 5. Race and Ethnicity Trends: 1990-2005 Norwalk Fairfield County PMR White Non-White Hispanic White Non-White Hispanic White Non-White Hispanic 1990 62,106 16,225 7,340 700,352 127,294 70,815 120,753 18,129 8,481 2000 61,339 21,612 12,966 699,992 182,575 104,835 123,184 24,600 14,349 2005 61,747 22,579 14,824 708,206 201,057 122,324 123,841 27,182 16,570 Distribution 1990 79.3% 20.7% 9.4% 84.6% 15.4% 8.6% 86.9% 13.1% 6.1% 2000 73.9% 26.1% 15.6% 79.3% 20.7% 11.9% 83.4% 16.6% 9.7% 2005 73.2% 26.8% 17.6% 77.9% 22.1% 13.5% 82.0% 18.0% 11.0% Number Change 1990-2000 -767 5,387 5,626 -360 55,281 34,020 2,431 6,471 5,868 2000-2005 408 967 1,858 8,214 18,482 17,489 657 2,582 2,221 1990-2005 -359 6,354 7,484 7,854 73,763 51,509 3,088 9,053 8,089 Percent Change 1990-2000 -1.2% 33.2% 76.6% -0.1% 43.4% 48.0% 2.0% 35.7% 69.2% 2000-2005 0.7% 4.5% 14.3% 1.2% 10.1% 16.7% 0.5% 10.5% 15.5% 1990-2005 -0.6% 39.2% 102.0% 1.1% 57.9% 72.7% 2.6% 49.9% 95.4% Source: DemographicsNow.com

6. Conclusion Based on the demographic estimates analyzed, Norwalk has experienced overall population growth since 1990, particularly in important age cohorts such as middle-age families (35 to 54), near senior (55 to 64) and seniors (65 and over). In addition to the changing age structure of Norwalk, the city’s Hispanic population has doubled between 1990 and 2005. The increase in middle-age and older residents, along with an increasing Hispanic population, has implications for local retail establishments as well as the local housing market. For example, residents in the middle-age family cohort are typically at their peak earning potential during this time and generally spend this income on local goods and services. Also, near senior and senior households typically desire to downsize from larger homes to smaller, more maintenance-free units. Additionally, it should be noted that the demographic changes experienced in the past might not necessarily continue into the future – which may be the case relative to Norwalk.

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B. Housing Characteristics and Trends

1. Housing Tenure and Occupancy In 2005, Norwalk had a housing base of about 34,100 units, which represents an increase of almost 1,900 units (5.8%) since 1990. Norwalk’s housing growth rate was similar to that of the PMR (5.5%), but less (by one and one-half percentage points) than the expansion experienced in Fairfield County. Table 6 shows housing unit trends and projections for Norwalk, the PMR and Fairfield County between 1990 and 2005.

The expansion of Norwalk’s housing base can be attributed exclusively to owner- occupied units, with the number of owner-occupied units increasing by 15% (2,841 units) between 1990 and 2005. Norwalk’s growth in owner-occupied units is 1.5 percentage points higher than the PMR, but less (by one-half percentage point) than the growth experienced in Fairfield County over the same time period.

Between 1990 and 2005, the number of units in Norwalk’s rental stock has declined by over 5% - 5 percentage points more than the PMR, and almost three points more than the County over the same time period. The decline in the number of units in the regional rental stock, coupled with the increase in the regional supply of owner-occupied units is attributed to a combination of new construction of owner-occupied unit, and conversion of existing rental units to owner-occupancy (condominiums).

Table 6. Housing Occupancy and Tenure Trends: 1990-2005 1990 2000 2005 # Change 90-05 % Change 90-05 Total Housing Units Norwalk 32,224 33,753 34,107 1,883 5.8% Primary Market 55,613 57,790 58,677 3,064 5.5% Fairfield County 324,359 339,466 348,230 23,871 7.4% Owner-Occupied Norwalk 18,941 20,280 21,782 2,841 15.0% Primary Market 37,272 39,946 42,303 5,031 13.5% Fairfield County 208,122 224,516 240,311 32,189 15.5% Renter Occupied Norwalk 11,621 12,431 10,990 -631 -5.4% Primary Market 15,506 15,804 13,862 -1,644 -10.6% Fairfield County 96,892 99,716 89,256 -7,636 -7.9% Owner Occupancy Rate Norwalk 58.8% 60.1% 63.9% Primary Market 67.0% 69.1% 72.1% Fairfield County 64.2% 66.1% 69.0% Source: DemographicsNow

Norwalk’s owner-occupancy rate in 2005 was about 64% - over eight percentage points below the rate in the PMR, and about five points below the rate in Fairfield County. Between 1990 and 2005, all the comparable geographies increased their owner occupancy rate by about 5%.

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2. Building Permit Trends Based on the most current building permit data available, permits for single-family homes averaged about 79 units per year in Norwalk between 1996 and 2004. As shown in Table 7, permits ranged from a low of 56 permits in 2003 to a high of 99 in 1998 and 1999. Activity in 2004 (70 homes) was just below the average. The Bridgeport- Stamford-Norwalk Metropolitan Statistical Area (MSA) averaged 1,455 single-family permits between 1996 and 2004. Activity in 2004 (1,840 units) was well above the annual average and had the largest volume of single-family permits over the time period.

Table 7. Total Annual Building Permits City of Norwalk Reg. Total 1 Family 2 Family 3-4 Family 5+ Family Total Multi- Multifamily family Units Bldgs. Units Units Bldgs. Units Bldgs. Units Bldgs. Units Capture 2004 83 294 70 1 2 2 7 10 215 224 34.2% 2003 70 130 56 3 6 5 19 6 49 74 17.9% 2002 74 121 65 6 12 1 4 2 40 56 21.1% 2001 73 328 62 7 14 1 3 3 249 266 37.3% 2000 94 116 80 12 24 1 3 1 9 36 5.4% 1999 106 151 99 5 10 0 0 2 42 52 9.1% 1998 106 132 99 3 6 0 0 4 27 33 12.1% 1997 95 98 92 3 6 0 0 0 0 6 2.1% 1996 93 160 85 2 4 1 4 5 67 75 21.0% Bridgeport-Stamford-Norwalk CT MSA 1 Family 2 Family 3-4 Family 5+ Family Total Units Total Multifamily Units Units Units Units Bldgs. Units 2004 2,495 1,840 42 81 25 532 655 2003 1,964 1,550 52 52 37 310 414 2002 1,554 1,289 50 31 8 184 265 2001 1,951 1,238 46 18 20 649 713 2000 1,965 1,300 48 16 9 601 665 1999 2,026 1,455 42 18 29 511 571 1998 1,944 1,671 110 49 11 114 273 1997 1,689 1,431 66 106 7 113 285 1996 1,681 1,324 42 22 16 293 357 Source: U.S. Census Bureau

As also shown in Table 7, Norwalk has averaged 91 multi-family unit permits between 1996 and 2000. Between 2000 and 2004, over 650 units were permitted in Norwalk – 131 unit permits per year and representing 24% of the regional permit activity. Overwhelmingly, 86% of multi-family units permitted over the time period were for large (five units or more) buildings.

3. Conclusion Since 1990, construction activity in Norwalk has been steady and has focused exclusively on owner-occupied units (single-family homes and condominium units). More recently (between 2000 and 2004), Norwalk has experienced significant condominium development activity especially when compared to the region. This development activity has been particularly brisk in large (five or more units), multi-unit buildings.

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III. RETAIL MARKET INDICATORS This section reviews trends in retail sales, store count and sales productivity (average sales per store) for Fairfield County and for the City of Norwalk, Connecticut, over the 1992 to 2002 time period. In addition, a sampled inventory of the existing retail supply in Norwalk and along the Connecticut coast (I-95 corridor from Milford to Greenwich) is developed, as is an estimate of retail consumer spending demand for households within Norwalk and the surrounding communities. These in turn result in estimating the amount and type of additional supportable square feet (SF) of retail development. A. US Census of Retail Trade

1. Sales Over the 1992 to 2002 time period, total retail sales for selected goods and services increased in Fairfield County from $8.60 billion to $15.06 billion, an increase of 75.2% overall. This overall increase is above the estimated rate of inflation (28.5%) over the same time-period, indicating that there was real growth. Sales in Fairfield County also increased during the 1997 to 2002 time period by about 20.9%, also above the rate of inflation of 12.5% for that time period. However, not all store types realized a sales growth exceeding the rate of inflation for either period3. During the more expansive ten- year period the sales among general merchandisers increased by only 14.4%, well below the inflation rate of 28.5%. Sales among furniture stores increased by 28.6% for the ten- year period, a rate about commensurate with inflation. Sales among furniture stores and general merchandise stores actually declined in Fairfield County during the 1992 to 1997 period before increasing again (above the rate of inflation) for the 1997 to 2002 period. Overall, retail sales in Fairfield County increased by $3.86 billion between 1992 and 1997. In the 1997 to 2002 time period, retail sales in Fairfield County increased by about $2.60 billion, about $1.0 billion less than the prior five-year period.

In the City of Norwalk, retail sales increased more aggressively, at 103.9%, during the 1992 to 2002 time period. This overall sales increase was well above the rate of inflation for that time (except for furniture stores) and well above the rate of growth for Fairfield County as a whole. Retail sales in the City of Norwalk grew by nearly 50.0% during the 1997 to 2002 time period. This rate of growth was well above the rate of inflation as well as well above the rate of growth for Fairfield County as a whole. In the City of Norwalk, during the 1997 to 2002 time period only apparel stores realized a decline in sales. This is dissimilar to the increase among apparel stores for all of Fairfield County. Overall, retail sales increased in the City of Norwalk by about $0.50 billion between 1992 and 1997, and increased by $0.94 billion between 1997 and 2002. Table 8 shows retail sales trends in Norwalk and Fairfield County between 1992 and 2002.

3 It should be noted that the definitions and reporting of retail sales data shifted from the Standard Industrial Classification (SIC) code in the late 1990s to the more expansive North American Industrial Classification (NAIC) code. As such, not all individual line items of retailers and types of retail are directly comparable. Additionally, for reasons of confidentiality some individual line items for sales have been suppressed by the US Census.

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Table 8. Retail Sales Trends: 1992 to 2002 Fairfield County, CT Retail Sales in $000's Percent Change in Sales 2002 1997 1992 2002 - 1997 1997 - 1992 2002 - 1992 Eat, Drink $1,132,073 $892,296 $669,671 26.9% 33.2% 69.0% Auto Dealers $3,179,920 $2,397,222 $1,298,848 32.7% 84.6% 144.8% Furniture $521,887 $347,812 $405,853 50.0% -14.3% 28.6% Electronics, Appliances $347,501 $383,691 NA -9.4% NA NA Building Materials $1,190,110 $975,325 $425,299 22.0% 129.3% 179.8% Food Stores $2,215,743 $1,893,626 $1,570,161 17.0% 20.6% 41.1% Health, Beauty $787,705 $505,476 $293,379 55.8% 72.3% 168.5% Gas Stations $632,477 $512,934 $480,310 23.3% 6.8% 31.7% Apparel $1,023,581 $908,369 $643,590 12.7% 41.1% 59.0% Sporting Goods, Hobby, Music $397,555 $331,057 NA 20.1% NA NA General Merchandise $1,034,003 $888,576 $903,566 16.4% -1.7% 14.4% Miscellaneous Retail $381,213 $372,967 $1,908,758 2.2% -80.5% -80.0% Non-store Retail $2,219,448 $2,046,861 NA 8.4% NA NA TOTAL $15,063,216 $12,456,212 $8,599,435 20.9% 44.8% 75.2% Average / Store $2,655 $2,181 $1,521 21.7% 43.3% 74.5%

Without AUTO/GAS $11,250,819 $9,546,056 $6,820,277 17.9% 40.0% 65.0% Average / Store $2,209 $1,870 $1,348 18.1% 38.7% 63.8% Norwalk, CT Eat, Drink $117,735 $84,061 $66,067 40.1% 27.2% 78.2% Auto Dealers $219,290 $178,069 $109,335 23.1% 62.9% 100.6% Furniture $70,093 $55,739 $65,064 25.8% -14.3% 7.7% Electronics, Appliances $108,055 $85,298 NA 26.7% NA NA Building Materials $181,260 $152,300 $42,514 19.0% 258.2% 326.4% Food Stores $299,439 $219,566 $197,297 36.4% 11.3% 51.8% Health, Beauty $64,048 $41,235 $26,185 55.3% 57.5% 144.6% Gas Stations $63,388 $47,912 $45,221 32.3% 6.0% 40.2% Apparel $81,453 $91,759 $58,289 -11.2% 57.4% 39.7% Sporting Goods, Hobby, Music $61,359 $48,790 NA 25.8% NA NA General Merchandise $191,845 $62,686 NA 206.0% NA NA Miscellaneous Retail $41,773 $36,094 NA 15.7% NA NA Nonstore Retail $1,312,565 $773,068 NA 69.8% NA NA TOTAL $2,812,303 $1,876,577 $1,379,026 49.9% 36.1% 103.9% Average / Store $4,703 $3,081 $2,512 52.6% 22.7% 87.2%

Without AUTO/GAS $2,529,625 $1,650,596 $1,224,470 53.3% 34.8% 106.6% Average / Store $4,755 $2,996 $2,546 58.7% 17.7% 86.8% SOURCE : US Census of Retail Trade and RKG Associates, Inc.

2. Store Count The count of retail stores in Fairfield County increased nominally by 0.4% between 1992 and 2002, and actually declined by -0.7%, falling from 5,712 stores in 1997 to 5,674 stores in 2002. Store types that increased during the 1992 to 2002 time period included eating/drinking places, auto dealers, building materials and health and beauty (drug) stores. The count of auto dealers and eating/drinking places in Fairfield County also increased during the 1997 to 2002 time period, as did the number of furniture stores.

In the City of Norwalk, the number of retailers increased by 8.9% during the 1992 to 2002 time period, well above the growth for Fairfield County. However, the number of retailers in the City of Norwalk declined by -1.8% during the 1997 to 2002 time period, a rate more than double that for Fairfield County. Interestingly, there was growth in the

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number of retailers for the 10-year period from 1992 to 2002, despite losses during the most recent 5-year period of 1997 to 2002. Table 9 shows the change in retail stores for Norwalk and Fairfield County between 1992 and 2002.

Table 9. Retail Store Count Trends: 1992-2002 Fairfield County, CT Retail Store Count Percent Change in Store Count 2002 1997 1992 2002 - 1997 1997 - 1992 2002 - 1992 Eat, Drink 1,798 1,704 1,495 5.5% 14.0% 20.3% Auto Dealers 297 284 248 4.6% 14.5% 19.8% Furniture 340 324 483 4.9% -32.9% -29.6% Electronics, Appliances 145 162 NA -10.5% NA NA Building Materials 314 317 238 -0.9% 33.2% 31.9% Food Stores 568 573 625 -0.9% -8.3% -9.1% Health, Beauty 256 261 163 -1.9% 60.1% 57.1% Gas Stations 284 323 346 -12.1% -6.6% -17.9% Apparel 625 671 650 -6.9% 3.2% -3.8% Sporting Goods, Hobby, Music 278 299 NA -7.0% NA NA General Merchandise 70 81 89 -13.6% -9.0% -21.3% Miscellaneous Retail 456 484 1,315 -5.8% -63.2% -65.3% Nonstore Retail 243 229 NA 6.1% NA NA TOTAL 5,674 5,712 5,652 -0.7% 1.1% 0.4%

Without AUTO/GAS 5,093 5,105 5,058 -0.2% 0.9% 0.7%

Norwalk, CT Eat, Drink 194 198 150 -2.0% 32.0% 29.3% Auto Dealers 36 30 32 20.0% -6.3% 12.5% Furniture 35 40 66 -12.5% -39.4% -47.0% Electronics, Appliances 18 20 NA -10.0% NA NA Building Materials 33 36 23 -8.3% 56.5% 43.5% Food Stores 59 57 53 3.5% 7.5% 11.3% Health, Beauty 25 25 16 0.0% 56.3% 56.3% Gas Stations 30 28 36 7.1% -22.2% -16.7% Apparel 38 50 49 -24.0% 2.0% -22.4% Sporting Goods, Hobby, Music 27 25 NA 8.0% NA NA General Merchandise 10 12 9 -16.7% 33.3% 11.1% Miscellaneous Retail 47 48 115 -2.1% -58.3% -59.1% Nonstore Retail 46 40 NA 15.0% NA NA TOTAL 598 609 549 -1.8% 10.9% 8.9%

Without AUTO/GAS 532 551 481 -3.4% 14.6% 10.6% Source: US Census of Retail Trade and RKG Associates, Inc.

3. Sales Productivity The average store (inclusive of auto and gasoline) sales, or productivity, was about $1.52 million in Fairfield County in 1992. By 2002, this had increased to $2.66 million, or about 74.5%, well ahead of inflation. In the more narrow 1997 to 2002 time period sales productivity increased by 21.7% in Fairfield County, from $2.18 million to $2.66 million. During the 1992 to 1997 time period the average sales among drug stores and general merchandisers increased by less than 10.0% in Fairfield County, the sales increase among these store types for the 1997 to 2002 time period was nearly 60.0% and 35.0%, respectively. If automobile and service station sales are excluded, the average retailer in

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Fairfield County experienced sales of $1.35 million in 1992 and $2.21 million in 2002, an increase of 65.0%, with about $0.50 million in each five-year time period.

In the City of Norwalk, average store sales (for all store types) was $2.51 million in 1992 and had increased to $4.70 million by 2002, an increase of more than 87.0%. This rate of growth exceeds that for Fairfield County and the absolute dollar amount is well above that for Fairfield County. The increase in average store sales for the 5-year period from 1997 to 2002 was even more impressive. The average retail sales in the City of Norwalk grew by 52.6% (compared with a 21.7% growth in the County) and rose by nearly $1.70 million as opposed to a $0.50 million increase in the County. Table 10 shows average sales per store trends in Norwalk and Fairfield County between 1992 and 2002.

Table 10. Sales per Store Trends: 1992-2002 Fairfield County, CT Average Sales per Store Percent Change in Productivity 2002 1997 1992 2002 - 1997 1997 - 1992 2002 - 1992 Eat, Drink $629,629 $523,648 $447,940 20.2% 16.9% 40.6% Auto Dealers $10,706,801 $8,440,923 $5,237,290 26.8% 61.2% 104.4% Furniture $1,534,962 $1,073,494 $840,275 43.0% 27.8% 82.7% Electronics, Appliances $2,396,559 $2,368,463 NA 1.2% NA NA Building Materials $3,790,159 $3,076,735 $1,786,971 23.2% 72.2% 112.1% Food Stores $3,900,956 $3,304,757 $2,512,258 18.0% 31.5% 55.3% Health, Beauty $3,076,973 $1,936,690 $1,799,871 58.9% 7.6% 71.0% Gas Stations $2,227,032 $1,588,031 $1,388,179 40.2% 14.4% 60.4% Apparel $1,637,730 $1,353,754 $990,138 21.0% 36.7% 65.4% Sporting Goods, Hobby, Music $1,430,054 $1,107,214 NA 29.2% NA NA General Merchandise $14,771,471 $10,970,074 $10,152,427 34.7% 8.1% 45.5% Miscellaneous Retail $835,993 $770,593 NA 8.5% NA NA Nonstore Retail $9,133,531 $8,938,258 NA 2.2% NA NA TOTAL $2,654,779 $2,180,709 $1,521,485 21.7% 43.3% 74.5%

Without AUTO/GAS $2,209,075 $1,869,942 $1,348,414 18.1% 38.7% 63.8%

Norwalk, CT Eat, Drink $606,881 $424,551 $440,447 42.9% -3.6% 37.8% Auto Dealers $6,091,389 $5,935,633 $3,416,719 2.6% 73.7% 78.3% Furniture $2,002,657 $1,393,475 $985,818 43.7% 41.4% 103.1% Electronics, Appliances $6,003,056 $4,264,900 NA 40.8% NA NA Building Materials $5,492,727 $4,230,556 $1,848,435 29.8% 128.9% 197.2% Food Stores $5,075,237 $3,852,035 $3,722,585 31.8% 3.5% 36.3% Health, Beauty $2,561,920 $1,649,400 $1,636,563 55.3% 0.8% 56.5% Gas Stations $2,112,933 $1,711,143 $1,256,139 23.5% 36.2% 68.2% Apparel $2,143,500 $1,835,180 $1,189,571 16.8% 54.3% 80.2% Sporting Goods, Hobby, Music $2,272,556 $1,951,600 NA 16.4% NA NA General Merchandise $19,184,500 $5,223,833 NA 267.2% NA NA Miscellaneous Retail $888,787 $751,958 NA 18.2% NA NA Nonstore Retail $28,534,022 $19,326,700 NA 47.6% NA NA TOTAL $4,702,848 $3,081,407 $2,511,887 52.6% 22.7% 87.2%

Without AUTO/GAS $4,754,934 $2,995,637 $2,545,676 58.7% 17.7% 86.8% Source: US Census of Retail Trade and RKG Associates, Inc.

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4. Comparative Market Shares As presented in Table 11, the City of Norwalk has realized an increased “market share” of retail sales among many types of retailing within Fairfield County. In 1992, eating and drinking sales in the City of Norwalk represented 9.9% of County sales, but increased to a 10.4% representation by 2002 after a slight decline in 1997. Similarly, sales among grocery stores in Norwalk accounted for 13.5% of such sales in the County in 2002, up from the 1992 representation and despite a decline in 1997. More aggressively, retail sales among general merchandise stores and among electronic/appliance stores increased to an 18.6% and 31.1% representation, respectively, in 2002, indicating that the City of Norwalk may be an importer and/or destination draw for these types of retail sales. As also indicated in Table 11, the average sales per store among many Norwalk merchants are well above that for Fairfield County. Two categories (excluding auto/gas), or store types, where the average sales per store in Norwalk are below that of Fairfield County are eating/drinking places and health and beauty (drug stores).

Table 11. City of Norwalk Retail Sales as Percent of Fairfield County Sales Retail Sales Trends Retail Sales per Store 2002 1997 1992 2002 1997 1992 Eat, Drink 10.4% 9.4% 9.9% 96.4% 81.1% 98.3% Auto Dealers 6.9% 7.4% 8.4% 56.9% 70.3% 65.2% Furniture 13.4% 16.0% 16.0% 130.5% 129.8% 117.3% Electronics, Appliances 31.1% 22.2% NA 250.5% 180.1% NA Building Materials 15.2% 15.6% 10.0% 144.9% 137.5% 103.4% Food Stores 13.5% 11.6% 12.6% 130.1% 116.6% 148.2% Health, Beauty 8.1% 8.2% 8.9% 83.3% 85.2% 90.9% Gas Stations 10.0% 9.3% 9.4% 94.9% 107.8% 90.5% Apparel 8.0% 10.1% 9.1% 130.9% 135.6% 120.1% Sporting Goods, Hobby, Music 15.4% 14.7% NA 158.9% 176.3% NA General Merchandise 18.6% 7.1% NA 129.9% 47.6% NA Miscellaneous Retail 11.0% 9.7% NA 106.3% 97.6% NA Nonstore Retail 59.1% 37.8% NA 312.4% 216.2% NA TOTAL 18.7% 15.1% 16.0% 177.1% 141.3% 165.1%

Without AUTO/GAS 22.5% 17.3% 18.0% 215.2% 160.2% 188.8% SOURCE : US Census of Retail Trade and RKG Associates, Inc.

5. Conclusion The overall growth in retail sales, as well as the average sales per store in the City of Norwalk, indicates increasing strength in the retail market in Norwalk. More particularly, selected store types in the City of Norwalk likely serve a broad geographic area, indicating a regional draw and/or a retail magnet (destination) upon which future retail development may capitalize. B. Shopping Center Inventory High visibility locations, with high traffic counts and relatively easy access are generally where retail shopping venues cluster. Retail shopping centers in Norwalk are primarily concentrated along the major arterials of Route 1 (Connecticut Avenue and Westport Avenue) especially with the linkage to neighboring Darien, Route 719 (Main Street) and Route 123. Shopping centers are also prevalent near the interchange access with Routes 7/15.

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The vast majority of these shopping centers are classified as neighborhood centers that are defined as providing “for the sales of convenience goods and personal services for day-to- day living needs of the immediate neighborhood with a supermarket being the principal tenant”.4 There are also several community centers that typically have “a wider range of facilities for the sale of soft lines (apparel) and hard lines than the neighborhood center. It is built around a junior department store, variety store or discount department store although it may have a strong specialty store”.5 None of the shopping centers is categorized as regional shopping centers or power centers, and in-field observations support this finding.

According to the data compiled by the National Research Bureau, the average rents in the Norwalk shopping centers are around $25/SF to $30/SF. Subsequent conversations with commercial brokers and realtors active in the Norwalk market indicate that $25/SF is about the average range of retail rents for most types of space. Of course, this would vary with the size of the space, as well as the length of the lease and the ability of the tenant to serve as an “anchor tenant”. Rents for smaller shops, and those concentrated in the SoNo (South Norwalk) district, are reported to range as high as $35/SF to $45/SF.

According to information developed by the National Research Bureau, of Chicago, IL, there is more than 2.85 million SF of retail shopping centers in Norwalk and the immediately surrounding communities of Darien, Westport and Wilton. Norwalk ranks very high with respect to the amount of shopping center space (in terms of total SF) when compared to the immediately adjacent communities of Darien, Westport and Wilton. In the broader Norwalk region, extending eastward and westward along Interstate 95, there is an estimated 9.98 million SF of shopping center space (a complete listing of these centers is presented in the Appendix section). As indicated in Table 12, nearly 15.6% of the retail shopping center space in all of these communities is in Norwalk. This places Norwalk fourth among these communities, behind Milford, Stamford and Trumbull with respect to the amount of shopping center space.

Table 12. Shopping Center Inventory and Density: 2005 Shopping Community SF % of Total 2005 Pop SF/Capita Norwalk, CT 1,556,500 15.6% 80,810 19.3 Bridgeport, CT 256,300 2.6% 139,880 1.8 Darien, CT 145,200 1.5% 18,770 7.7 Fairfield, CT 745,600 7.5% 58,400 12.8 Greenwich, CT 353,500 3.5% 56,200 6.3 Milford, CT 1,833,100 18.4% 51,420 35.6 Stamford, CT 1,710,600 17.1% 109,620 15.6 Stratford, CT 614,900 6.2% 49,500 12.4 Trumbull, CT 1,607,600 16.1% 32,710 49.1 Westport, CT 651,400 6.5% 25,460 25.6 Wilton, CT 500,600 5.0% 17,150 29.2 TOTAL 9,975,300 100.0% 639,920 15.6 Source : National Research Bureau, State of CT Office of Policy & Management and RKG

4 The Shopping Center Directory, National Research Bureau, 43rd edition, 2003. 5 Ibid.

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While the amount of shopping center space is relatively high in Norwalk, it is surrounded by larger communities and retail venues (in terms of total SF) concentrations, such as Stamford to the west and Milford to the east. Typically, retail sales diminish with distance and density. As such, despite lesser concentrations of retail square footage in other communities, such as Greenwich and Bridgeport, their distance from Norwalk, as well as their proximity to other retail centers, diminishes the likely retail draw of these consumers to Norwalk.

The estimated amount of shopping center space (in SF) per population (a measure of shopping center density) is 19.3 in Norwalk, slightly higher than in Stamford to the west, but well below that in Milford, Trumbull and Westport to the east. This also indicates that the draw of consumer dollars from points east of Norwalk may be limited, given alternative shopping venues. Map 1 depicts these concentrations of shopping center space by community.

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1. Broker Interviews Conversations with area retail brokers and developers indicate that the Norwalk retail market is strong and competitive. Additionally, there is a scarcity of large tracts of land for additional development. Reportedly, asking prices for land could be as high as the $2.0 million per acre range. The major anchor tenant retailers and regional/national chains that are in Norwalk are not likely to abandon the market, given its preferential customer demographics. As such, there is little turnover of existing facilities and sites for future development. Reportedly, one furniture retailer has been looking for a suitable site within the Norwalk market for more than two years, and is now under construction along Route 1 (western side of town). According to some brokers interviewed, most of the major anchor tenant stores are continually looking for locations in the market, often to replace their existing unit with their newer, larger prototype.

Brokers further indicated that Norwalk is a destination shopping hub for southern portions of Fairfield County and that the potential retailers would be “creative” with their store prototype in order to better penetrate the Norwalk market, or to develop a presence in the Norwalk market. One broker suggested that there is local demand to accommodate an additional 200,000 SF or so of major anchor tenant retail as well as smaller, support retail. Other brokers wondered whether there would be sufficient neighborhood, and everyday retail for the new residential development in the downtown area.

In either event, brokers concurred that a potential drawback for additional retail development in either the Reed Putnam or West Avenue areas would be the perceived lack of parking spaces, or the amount of land area that would need to be dedicated to parking. Furthermore, any additional retail development in either of these two areas would need to be of the type that both met local needs and would be a multiple destination shopping experience; meaning that more than one store was visited with each shopping trip. Also, any additional retail should be of the type that requires two (or more) trips a month.

2. Conclusion This concentration of retail shopping venues in Norwalk further indicates that the City pulls customers from a wider geography than the City boundaries, in other words, customers living in neighboring communities to the west, especially Darien, New Canaan and Wilton, are shopping in Norwalk. This is also true of residents of Westport, to the east, but to a lesser extent. The concentration of retail development in Norwalk along Route 1 attests to this conclusion.

As such, the primary market area for Norwalk retailing is considered to be the City of Norwalk. In-field drive times and alternative shopping venues in other markets results in an estimated secondary market for Norwalk retailing that includes Darien (15.0% of household demand), New Canaan (20.0% of household demand), Wilton (25.0% of household demand) and Westport (10.0% of household demand).

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C. Consumer Demand and Sales This section reviews estimates of 2005 and 2010 consumer demand for the purchase of retail goods and services from Norwalk households, as well from households in the abutting communities of Darien and New Canaan.

In addition, estimated 2005 sales among Norwalk retail businesses and establishments are presented. The estimated 2005 demand and the 2005 sales are then compared in order to measure to what extent, and in what retailing categories, Norwalk is an importer or an exporter of consumer activity. To the extent there is unmet local demand and sales leakage6 in the Norwalk market, then a portion of this unmet demand could be captured locally given the potential for additional supportable retail development and for fostering the strengths of the retail clusters (furniture and furnishings as an example) in the Norwalk retail market.

1. Demand The estimated household consumer demand from Norwalk households (the primary market) in 2005 for selected retail goods was nearly $1.48 billion, or an average of $45,150 per household, inclusive of nearly $12,500 per household for automotive/gasoline purchases and $3,400 for non-store7 purchasing (includes catalogs, internet, vending and other). Excluding automotive/gasoline and non-store demand, the average Norwalk household realized approximately $29,250 in annual retail demand, or about $958.59 million in total. The estimated consumer demand from households in the secondary market results in an additional $510.83 million in total. If automotive/gasoline and non-store demand is excluded from the secondary market, the resulting total consumer demand for the combined primary and secondary market areas is $1.29 billion as highlighted, by major retail store type, in Table 13.

6 Sales leakage represents the difference between local demand for retail goods and services and local capture (sales) of retail goods and services. All markets experience some degree of sales leakage as consumers shop where they perceive there to be better pricing, selection and competitive alternatives; away from home; and, via the internet and other non- traditional bricks and mortar retail venues. 7 Non-store demand and sales include mail order, internet/electronic selling, vending machines and other direct selling.

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Table 13. Norwalk, CT Estimated 2005 Household Consumer Demand and Spending

Primary Market Secondary Market Total Store Type (Code) % of Demand Avg HH Demand Avg HH Demand Demand Motor Vehicle and Parts Dealers-441 $289,259,990 $8,826 19.6% $99,878,706 $3,405 $389,138,696 Furniture and Home Furnishings Stores-442 $43,054,491 $1,314 2.9% $14,866,304 $507 $57,920,795 Electronics and Appliance Stores-443 $38,961,189 $1,189 2.6% $13,452,926 $459 $52,414,115 Building Material, Garden Equip Stores -444 $139,757,764 $4,265 9.4% $48,257,018 $1,645 $188,014,782 Food and Beverage Stores-445 $172,916,392 $5,276 11.7% $59,706,375 $2,035 $232,622,767 Health and Personal Care Stores-446 $65,280,275 $1,992 4.4% $22,540,654 $768 $87,820,929 Gasoline Stations-447 $120,181,521 $3,667 8.1% $41,497,529 $1,415 $161,679,050 Clothing and Clothing Accessories Stores-448 $79,104,882 $2,414 5.3% $27,314,159 $931 $106,419,041 Sporting Goods, Hobby, Book, Music Stores- $29,874,217 $912 2.0% $10,315,281 $352 $40,189,498 451 General Merchandise Stores-452 $192,084,926 $5,861 13.0% $66,325,087 $2,261 $258,410,013 Miscellaneous Store Retailers-453 $40,133,755 $1,225 2.7% $13,857,801 $472 $53,991,556 Non-Store Retailers-454 $111,384,143 $3,399 7.5% $38,459,879 $1,311 $149,844,022 Foodservice and Drinking Places-722 $157,424,262 $4,804 10.6% $54,357,091 $1,853 $211,781,353 TOTAL $1,479,417,807 $45,143 100.0% $510,828,810 $17,414 $1,990,246,617 Without Automotive/Gas/Non-store $958,592,153 $29,250 $330,992,696 $11,283 $1,289,584,849 Source : Claritas, Urban Land Institute and RKG

2. Sales Estimated consumer sales in the Norwalk market area, for 2005, indicate sales in Norwalk of slightly less than $3.05 billion, inclusive of approximately $1.42 billion in non-store sales and an additional $303.10 million in automotive/gasoline sales. Excluding these categories, retail sales in Norwalk total an estimated $1.32 billion in 2005 and this exceeds the estimated $1.29 billion in consumer demand (excluding automotive/gasoline and non-store retail), indicating that Norwalk is a net importer of total retail sales. This is consistent with earlier findings regarding the concentrations of retail shopping venues and densities in Norwalk relative to surrounding communities (as presented in Table 14).

Table 14. Norwalk, CT Estimated 2005 Household Consumer Demand and Spending

Store Type (Code) Total (IMPORT $) Sales EXPORT $ Motor Vehicle and Parts Dealers-441 $238,061,225 $151,077,471 Furniture and Home Furnishings Stores-442 $76,092,961 ($18,172,166) Electronics and Appliance Stores-443 $117,304,508 ($64,890,393) Building Material, Garden Equip Stores -444 $196,775,855 ($8,761,073) Food and Beverage Stores-445 $325,070,978 ($92,448,211) Health and Personal Care Stores-446 $69,530,508 $18,290,421 Gasoline Stations-447 $65,029,041 $96,650,009 Clothing and Clothing Accessories Stores-448 $88,425,377 $17,993,664 Sporting Goods, Hobby, Book, Music Stores-451 $66,611,331 ($26,421,833) General Merchandise Stores-452 $208,266,932 $50,143,081 Miscellaneous Store Retailers-453 $45,481,455 $8,510,101 Non-Store Retailers-454 $1,421,902,564 ($1,272,058,542) Foodservice and Drinking Places-722 $127,813,116 $83,968,237 TOTAL $3,046,365,851 ($1,056,119,234) Without Automotive/Gas/Non-store $1,321,373,021 ($31,788,172) Source: Claritas, Urban Land Institute and RKG

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3. Conclusion Across many broad retail categories, the Norwalk market area is a net importer of consumer sales activity, estimated to be $31.79 million in 2005. As such, there are strengths in the local market that may be utilized in attracting additional retail development. As an example, there is a very high sales volume for furniture, home furnishings, electronic and appliances in Norwalk, far exceeding local demand. This indicates that Norwalk is a retail destination, from a broader geographic area, for these types of purchases. D. Sales Leakage and Supportable Retail As noted in the previous section, the City of Norwalk is a net importer of total retail sales in 2005 for a variety of store types. This has been estimated to amount to $31.79 million, exclusive of automotive/gasoline and non-store sales.

However, within these broad retail categories and merchandise lines, there are subsets of store types or merchandise lines. As an example, the broad category of building materials and garden equipment stores includes the more narrow (or subset) focus of paper/wallpaper stores; hardware stores; lumberyards, outdoor power equipment and nurseries/garden stores.

Among many of these subset (or more narrow focus) store types, the Norwalk market area is an exporter of retail sales. In other words, there is sales leakage from Norwalk, meaning that there is local demand that is not being met by local retailers. This analysis estimates that there is $371.04 million (in 2005) of sales leakage, unmet local demand, for retail sales among selected store types. This is projected to increase to nearly $427.70 million by 2010 (inflated 2010 dollars) assuming that no additional significant inventory of retailing venues is introduced. In other words, existing households in the Norwalk market area currently (2005) are spending $371.04 million of their retail demand in non-Norwalk market area stores. By 2010, these same households are projected to be spending $426.70 million of their retail dollars in non-Norwalk market area stores.

An increased capturing of the local retail demand, or this sales leakage, could equate to the potential for additional retail development in Norwalk. This analysis conservatively assumes that an increased presence and mix of retailing venues in Norwalk could capture 30.0% (Low), 40.0% (Medium) or 50.0% (High) of the unmet retail demand over tike and by 2010.

As such, this could result in an estimated additional supportable 317,100 SF to 528,500 SF of retail development in Norwalk come year 2010, as presented in Table 15. This range of supportable new retail development represents a conservative (30.0%) to a somewhat more aggressive (50.0%) recapture of existing sales leakage from Norwalk consumers. The reasonable estimate of additional supportable retail development is likely somewhere in the middle, or an estimated 422,800 SF.

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Table 15. Norwalk, CT: Estimated Supportable Additional Retail Area 2010 SF of New Retail from 2005 2010 Recapture Store Type and Code Unmet Unmet of Existing HH Consumer Demand Demand Demand Low Medium High Motor Vehicle and Parts Dealers-441 NA NA NA NA NA Furniture and Home Furnishings Stores-442 $6,348,622 $7,300,916 8,105 10,806 13,508 Electronics and Appliance Stores-443 NA NA NA NA NA Building Material, Garden Equip Stores -444 $85,617,060 $98,459,619 89,935 119,913 149,891 Food and Beverage Stores-445 $11,420,129 $13,133,149 7,213 9,617 12,021 Health and Personal Care Stores-446 $18,290,421 $21,033,984 15,036 20,049 25,061 Clothing and Clothing Accessories Stores-448 $22,820,240 $26,243,276 29,490 39,320 49,150 Sporting Goods, Hobby, Book, Music Stores-451 $3,471,028 $3,991,682 5,032 6,710 8,387 General Merchandise Stores-452 $125,799,507 $144,669,433 80,463 107,284 134,106 Miscellaneous Store Retailers-453 $13,299,830 $15,294,805 24,974 33,298 41,623 Foodservice and Drinking Places-722 $83,968,237 $96,563,473 56,832 75,776 94,721 TOTAL $371,035,075 $426,690,336 317,080 422,773 528,466 Source : US Census of Retail Trade, Claritas, ULI and RKG

1. New Households The previous assessments of consumer demand and spending reflect the consultants’ estimate of the additional supportable retail development from an increased penetration of the existing households within the Norwalk market. Every 1,000 new households in the Norwalk market area equates to an additional $24.82 million (constant 2005 dollars) in consumer demand. This in turn results in additional supportable retail development ranging from 45,000 SF to 58,000 SF as presented in the following Table 16, with the reasonable estimated midpoint of 51,300 SF per 1,000 new households.

Table 16. Norwalk, CT: Estimated Supportable Additional Retail Area per 1,000 New Households Supportable NEW Retail per 1,000 / NEW HH Store Type and Code Retail Constant 2005 Demand $ Demand Low Medium High Motor Vehicle and Parts Dealers-441 NA NA NA NA Furniture and Home Furnishings Stores-442 $932,597 3,168 3,621 4,074 Electronics and Appliance Stores-443 $843,932 2,093 2,392 2,691 Building Material, Garden Equip Stores -444 $3,027,272 6,721 7,682 8,642 Food and Beverage Stores-445 $3,745,516 6,269 7,164 8,060 Health and Personal Care Stores-446 $1,414,026 2,752 3,145 3,538 Clothing and Clothing Accessories Stores-448 $1,713,479 5,252 6,003 6,753 Sporting Goods, Hobby, Book, Music Stores-451 $4,807,824 2,632 3,008 3,384 General Merchandise Stores-452 $4,160,723 7,266 8,304 9,341 Miscellaneous Store Retailers-453 $761,451 3,192 3,648 4,104 Foodservice and Drinking Places-722 $3,409,943 5,546 6,338 7,130 TOTAL $24,816,764 44,891 51,304 57,717 Source : US Census of Retail Trade, Claritas, ULI and RKG

2. Conclusion Increased sales penetration or capturing of the consumer demand, from existing households in the Norwalk market equates to the estimated potential for an additional supportable 317,100 SF to 528,500 SF of retail development by 2010. In addition to the estimated demand from existing households in the Norwalk market, it is estimated that every 1,000 new households in the Norwalk market would result in an additional 45,000

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SF to 58,000 SF of supportable new retail space. These represent the conservative and more aggressive ends of the range of additional supportable retail development, such that the reasonable midpoint is 422,800 SF from recaptured sales leakage and an additional 51,300 SF from every new 1,000 households. E. Retail Inventory – Norwalk Assessor Data provided by the City of Norwalk Assessor’s Office indicates that there is slightly more than 4.93 million SF of retail properties (within specific land use codes) in the City of Norwalk. These are presented in Table 17.

SoNo Restaurant District

Table 17. Retail Inventory of Norwalk, CT Land Use Total Total % of Use Code Acres SF Total SF Discount Store (1) 211 22.17 458,468 9.3% Strip Plaza (2) 212 57.35 1,165,946 23.6% Convenience Store 213 0.41 4,120 0.1% Retail Store 214 89.94 1,748,761 35.4% Liquor Store 215 0.42 9,612 0.2% Shopping Center (2) 216 44.56 605,087 12.3% Supermarket (3) 217 21.14 283,784 5.8% Enclosed Shopping 218 9.01 365,987 7.4% Fast Food Restaurant 225 12.90 81,894 1.7% Restaurant & Bar 226 4.29 86,930 1.8% Restaurant < 26 seats 227 0.71 12,413 0.3% Restaurant > 26 seats 228 2.96 81,979 1.7% Diner 229 1.89 22,846 0.5% Night Club 230 0.30 6,648 0.1% TOTAL 268.06 4,934,475 100.0% Source : City of Norwalk and RKG (1) Stand alone establishments such as Costco Warehouse Club (2) Could include multiple uses, e.g., general merchandisers and grocery

(3) Typically refers to a stand alone

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Retail shopping centers, considered as land use codes 212 (strip plaza) and 216 (shopping center), amount to 1,771,033 SF of the retail space in Norwalk, or about 36.0% of the above inventory. The previously sampled inventory (from the National Research Bureau) indicates that there is 1,556,500 SF of retail shopping center space in Norwalk (a difference of around 215,000 SF). This higher concentration, per the City of Norwalk Assessor’s Office, serves to reinforce the earlier conclusion that the City (at least for some types of retail merchandise) is a magnet or importer of sales from a broader geography than just the City.

Retail Establishment Under-Construction SoNo Retail Area

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IV. OFFICE MARKET INDICATORS This section reviews trends in the office market for Fairfield County, CT, and its sub-regions, including the City of Norwalk. This data has been compiled from published reports, as developed by CB Richard Ellis8 and interviews with area commercial brokers, realtors and developers. A. Office Market Overview Information compiled by CB Richard Ellis indicates that there was 4.1 million SF of office spaced leased in Fairfield County in 2005. Nonetheless, there remains approximately 7.0 million SF of available space throughout Fairfield County, representing an availability rate of nearly 16.0%. The asking rents for available space have increased in the last year and equate to a little more than $28.00/SF. Table 18 summarizes the office market in Fairfield County, as of year end 2005. This data has been interpolated by the consultants and due to rounding, may differ slightly than the published report from CB Richard Ellis.

Table 18. Fairfield County, CT Office Market Overview -Year End 2005 Leasing Total SF Available Available (SF) Net (SF) Net as a Avg Asking in % of millions SF Rate Activity Absorption Total Rent / SF $34.05 (CBD) / Stamford 15.9 3,100,000 19.5% 1,802,700 127,380 0.8% $27.26 (Other) Greenwich 4.4 665,050 15.1% 367,260 17,120 0.4% $44.14 Central (Norwalk) 10.9 1,600,000 14.7% 1,100,000 99,280 0.9% $29.44 East 8.1 1,100,000 13.6% 703,700 80,190 1.0% $18.01 North 4.8 648,790 13.5% 159,710 7,210 0.2% $22.04 TOTAL 44.1 7,113,840 15.9% 4,133,370 331,180 0.8% $28.28 Central as % of County 24.7% 22.5% 26.6% 30.0% 104.1% Source: CB Richard Ellis and RKG

In 2005, there was positive absorption of office space throughout Fairfield County and all of its submarkets. There was approximately 100,000 SF of net positive absorption in the Central submarket, which includes Norwalk. However, as noted by CB Richard Ellis, nearly 52.0% of the leasing activity occurring in the County was intra-county transfers, i.e., from one sub-market to another.9 Only about 8.0% of the leasing activity was relocation of businesses from outside of the County and another 3.0% was absolute new ventures and businesses.

8 The CB Richard Ellis report includes office buildings of 20,000 SF or more, Class A and Class B space that are not owned or occupied by a government or medical institution store demand and sales include mail order, internet/electronic selling, vending machines and other direct selling. 9 This is down from the year 2004 activity where approximately 71.0% of the leasing activity in Fairfield County was actually relocations of existing business or intra-county transfers.

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Combined, these two equate to 11.0% of the leasing activity and represent slightly more than 462,000 SF of space.

Much of the new venture activity in the County was satisfied by small blocks of space, typically under 50,000 SF. At the end of 2005, there remained almost 40 separate properties (large block) with 50,000 SF or more of space available, representing a 4.0% increase over 2004. This is despite the closing of ten (10) lease deals in Fairfield County for large blocks of space (over 50,000 SF) in 2005 as compared with only four such leasing in 2004. Even with more leasing activity in 2005 for large block office space, as compared with 2004, there still remains increased availability of such space. In other words, despite improving demand there still remains ample supply.

1. Norwalk There has been positive leasing activity in the City of Norwalk over the past several years (2005 data not available) as presented in Table 19.

Table 19. Norwalk Office Market Trends 2000 2001 2002 2003 2004 Average Leasing Activity in SF 1,013,130 341,685 466,895 796,991 888,464 701,433 Available Rate 10.2% 28.3% 25.5% 21.7% 17.8% NA Asking Rent $29.68 $27.79 $27.06 $25.40 $24.57 $26.90 Large Blocks of SF Returned 99,718 419,360 129,351 225,784 144,710 203,785 Returned as % of Leasing 9.8% 122.7% 27.7% 28.3% 16.3% 29.1% Source : CB Richard Ellis, City of Norwalk and RKG

Recent leasing activity (year-end 2004) in Norwalk indicated there was more than 888,000 SF of leasing; however, it should be noted that slightly more than 59.0% of this leasing activity was represented by four (4) large transactions that were all relocations from Stamford and Greenwich.10 Over the 2000 to 2004 period there was an annual average of about 700,000 SF of office space leased in Norwalk. Over the same time period there was an average of about 204,000 SF of office space annually returned to the Norwalk market. This space reflects formerly occupied space that is now available. As a result, about 29.0% of all annual average leasing activity in Norwalk is otherwise “negated” by a return of vacant/available space. The availability rate in Norwalk has diminished from 28.3% in 2001 to 17.8% in 2004, an improvement but still well above the 10.2% of 2000.

There have been recent improvements in leasing activity in Norwalk, but it is like a roller coaster. Net positive absorption in 2004 for the Central submarket (which includes Norwalk) was approximately 401,900 SF according to CB Richard Ellis. As noted previously, net positive absorption for this submarket in 2005 was only 100,000 SF.

10 According to data compiled by CB Richard Ellis these include Diageo PLC (801 Main Avenue), FactSet Research Systems (601 Merritt 7), Interpublic Group of Companies (800 Connecticut Avenue) and GE Commercial Finance (401 Merritt 7).

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B. Broker Interviews In order to develop a better understanding of local real estate conditions with respect to the office market, interviews and conversations were completed with a sampling of brokers and developers active in the Norwalk and Fairfield County market. The following summarizes these conversations.

ƒ Some brokers indicated that, in their opinion, the existing inventory of 7.11 million SF of available (vacant or available for sub-let) office space in Fairfield County would represent about a five (5) year supply, assuming that no other developments were to come on line. ƒ Any significant additional inventory of large block space (50,000 SF and larger) could add 5 to 10 years to the supply. Reportedly, an additional 800,000 SF of Class A office space (asking rents of $28/SF to $34/SF) is planned as part of the Fairfield train station development. ƒ Brokers indicated that much of the leasing activity in Fairfield County was intra- county transfers of companies and leased space, rather than net new space. In other words, businesses relocate from Stamford to Norwalk, as an example. Eventually these intra-county transfers would diminish and cease, although some brokers were optimistic that there is the potential to “land” one more big tenant to Norwalk. ƒ Some brokers indicated there is a continuing need for small office space (under 5,000 SF) at affordable lease rates, while others suggest that additional large space is needed. ƒ The success and leasing activity of recent projects along the Merritt Parkway are believed to reflect the aggressive marketing of these projects as well as their perceived locational advantages, which may not necessarily be replicated elsewhere in the City.

1. Conclusion Not surprisingly, opinions regarding the overall health of the office market in Fairfield County and in the City of Norwalk vary from one broker to the next. Despite recent strengths in leasing activity, much of this activity represents intra-county transfers rather than net new leasing activity to Norwalk and Fairfield County.

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V. RESIDENTIAL MARKET The following section provides a summary of recently approved (and built) condominium developments, projects that are currently within the permitting “pipeline”, current condominium market sales volume and pricing, and examples of modern comparable condominium properties within the PMR. Additionally, occupancy, pricing and other information is provided relative to comparable modern apartment developments within the PMR. This in turn is followed by a brief discussion and review of the modern rental sector market. A. Condominium Market Indicators A review of recent, modern, multi-story residential developments is presented next. These, in turn, are considered applicable in assessing the potential for residential development for the West Avenue Corridor and Reed Putnam redevelopment sites.

1. Recently Approved or Pipeline Projects According to City of Norwalk officials, six condominium developments totaling 184 units were recently built or are currently under construction in Norwalk, a sample of which include Maritime Condominiums (Comparable 1), The Landings (Comparable 4), RiverWay (Comparable 5), and 442 Main (Comparable 11). In the region, two developments were recently built (within the past year) or are under construction, containing 23 units. This indicates that the Norwalk developments represent about 90% of the projects within the region.

City of Norwalk officials also indicated that Norwalk has twelve condominium developments totaling 864 units currently within the permitting pipeline, including a 316- unit project at the Norden site, and another 235-unit project at the Pepperidge Farm site. There is only one condominium development currently within the permitting pipeline located within the region. The prospective project is located in Westport, involves the redevelopment of an existing hotel and consists of nine units. Clearly, Norwalk is currently the focal point of condominium development with Norwalk’s proposed units equating to 99% of the regional supply of pipeline projects.

In addition to the developments within the permitting pipeline, there are approximately 1,300 condominium units that developers are discussing with the City; however, site plans or formal applications for development have not been filed for these projects.

2. Sales Volume As shown in Table 20, almost 900 condominium units changed hands in 2005 (with approximately 150 units being new units) representing an increase of over 200 units since 2000 (about 5% per year) and over 570 units since 1990 (about 12% per year). Sales of condominium units in Norwalk in 2005 represented about 86% of the sales within the primary market region – well above the 78% average capture rate that the city has

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experienced between 1990 and 2005. Between 1990 and 2005, Norwalk has had an average of 533 units change hands. Of the other primary market region communities, over the same time period, New Canaan has the highest volume of annual condominium sales (averaging 74 transfers) followed by Westport (46 transfers) and Darien (22 transfers).

Table 20. Condominium Sales Volume Trends: 1990-2005 Primary Region Secondary Region New Norwalk Greenwich Stamford Darien Westport Bridgeport Fairfield Norwalk Secondary Norwalk Canaan Total Capture Reg. Total Capture

1990 310 99 262 18 19 133 81 22 369 84.0% 575 53.9% 1991 348 105 239 22 23 129 87 31 424 82.1% 560 62.1% 1992 304 105 339 15 25 217 73 56 400 76.0% 734 41.4% 1993 338 184 467 19 53 191 98 67 477 70.9% 940 36.0% 1994 434 191 650 23 89 374 130 77 623 69.7% 1,345 32.3% 1995 464 218 664 40 44 402 167 106 654 70.9% 1,451 32.0% 1996 422 255 642 32 84 371 156 67 605 69.8% 1,424 29.6% 1997 463 252 816 18 53 413 181 78 612 75.7% 1,662 27.9% 1998 582 324 849 31 43 475 182 90 746 78.0% 1,830 31.8% 1999 672 345 1,009 19 57 482 155 97 845 79.5% 1,991 33.8% 2000 674 295 952 14 44 503 143 93 825 81.7% 1,893 35.6% 2001 608 229 1,098 19 33 540 132 81 741 82.1% 1,999 30.4% 2002 610 255 932 22 33 563 174 70 735 83.0% 1,924 31.7% 2003 600 236 1,070 15 46 551 154 85 746 80.4% 2,011 29.8% 2004 818 275 1,170 23 61 615 211 78 980 83.5% 2,271 36.0% 2005 881 292 1,054 21 32 616 195 88 1,022 86.2% 2,157 40.8% Source: Warren Group Information Services and RKG Associates, Inc. Note: Primary market region consists of Norwalk, Darien, Westport and New Canaan Secondary market region consists of Greenwich, Stamford, Bridgeport and Fairfield

As shown in Figure 1, sales volume in the secondary region market was about 2,150 units in 2005 representing an increase of 264 units since 2000 (about 2% per year) and over 1,580 units since 1990 (about 17% per year). In 2005, Norwalk captured approximately 28% of the sales activity within the secondary market region, which is up slightly (by three percentage points) over its average annual capture rate of 25% between 1990 and 2005. Within the secondary region market communities, between 2000 and 2005, Norwalk (31% or 207 units) was only behind Darien (50% or 7 units), Fairfield (36% or 52 units) relative to percentage growth in condominium transfers between 2000 and 2005.

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Figure 1. Condominium Sales Volume Trends: 1990-2005 Norwalk Primary and Secondary Market Areas

2500

2000

1500

1000

500

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: Warren Information Services. Note: Primary market area consists of Norwalk, Darien, Westport, New Canaan. Secondary market area consists of Greenwich, Stamford, Fairfield and Norwalk Primary Market Secondary Market Bridgeport.

3. Median Values The median price for condominiums in Norwalk in 2005 was $320,000, which represents an increase of $155,300 (94% or 16% per year) since 2000 and $169,000 (112% or 7% per year) since 1990. As shown in Figure 2, the median condominium price in Norwalk remained essentially flat during the 1990s, but then experienced significant appreciation in 2000 and onward. The median price of units in the primary market region was $618,750 in 2005 and increased by over $247,000 (67%) since 2000 and by $360,000 (139%) since 1990. Since 1990, the median price of condominium units within the primary market region has essentially been double the price of units found in Norwalk. The median price of units in the secondary market region was slightly higher than that in Norwalk at $357,750 in 2005 and increased by $178,500 (100%) since 2000 and by $206,000 (136%) since 1990. The median condominium price and price trend activity within the secondary market region is comparable to Norwalk primarily due to modest pricing levels in communities such as Bridgeport, Stamford, and, to a lesser extent, Fairfield.

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Figure 2. Median Condominium Sales Price Trends: 1990-2005 Norwalk Primary and Secondary Market Areas

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: Warren Information Services. Note: Primary market area consists of Norwalk, Darien, Westport, New Canaan. Secondary market area consists of Greenwich, Stamford, Fairfield and Norwalk Primary Market Area Secondary Market Area Bridgeport.

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4. Comparable Condominium Properties The following comparable projects in the Norwalk residential market area represent recent and modern development activity of multi-story condominium projects and as such are believed to be indicative of the type and/or style of proposed residential development in the two redevelopment areas (refer to Map2).

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COMPARABLE 1 Type: Condo/Flat Name: Maritime Condominiums Address: 29 Marshall Street Town: Norwalk, CT Year Built 2006 Total Units 61 units Unit SF: 898-966 (1BR); 1,283-1,843 (2BR) Available: 21 units Quality: Recent Pricing: $429,000-$449,000 (1BR) $569,000-$769,000 (2BR) $1,250,000+ (3BR) Price/SF: $478/SF-$676/SF

Amenities: 1 to 3 bedroom units, penthouse units with fireplaces, central air conditioning and high- end modern kitchen finishes.

Comments: 61-unit building currently under construction in Norwalk’s SoNo district with two-thirds of the units pre-sold. Development located adjacent to aquarium with riverfront views. Selling ten units per month.

COMPARABLE 2 Type: Condo/Townhouse Name: Terra Nova Address: Terra Nova Drive Town: Westport, CT Year Built: 2004 Total Units 54 units Unit/SF: 1,200 Available: None Quality: Recent Pricing: $1,299,000 (3BR) $1,140,000 (3BR) Price/SF: $550-$620/SF

Amenities: Gated security, pool, granite counters, full basement, deck, whirlpool, air conditioning.

Comments: Large three-bedroom units with two and one-half baths on the Westport/Norwalk line off of Boston Post Road. Unit recently sold within one hour of listing for full price ($1.3 million).

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COMPARABLE 3 Type: Condo/Flats Name: SoNo Lofts Address: 10 Ann Street Town: Norwalk, CT Year Built: 2004 Total Units N/A Unit/SF: 5,165-13,455 SF Available: 1 (1BR) Quality: Recent Pricing: $210,000-$405,000 (1BR) $471,500-$510,000 (2BR) Price/SF: $329-$539 (1BR) $361-$402 (2BR)

Amenities: Fitness center, high-speed internet, storage, in-unit washer/dryer, high-end kitchen finishes

Comments: Large studio, one, two and three-bedroom units in Norwalk’s SoNo District. Only available unit (1BR) listing for $474,900 ($464/SF).

COMPARABLE 4 Type: Condo/Flats Name: The Landings Address: 136 East Avenue Town: Norwalk, CT Year Built: 2006 Total Units 17 Unit/SF: 1,375-1,413 Available: 10 Quality: Recent Pricing: $550,000-$850,000 Price/SF: $400+/SF

Amenities: All 2 BR, 2.5 BA, hardwood floors, gas fireplaces, underground parking, custom kitchen cabinets, balconies.

Comments: Newly built two-bedroom units with two and one-half baths located on the Norwalk River within walking distance to commuter rail. According to the sales agent for the property, The Landings is absorbing two to three units per month since sales began in January.

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COMPARABLE 5 Type: Condo/Flats Name: RiverWay Address: Daskams Lane Town: Norwalk, CT Year Built: 2005 Total Units 57 Units Unit/SF: 1,000-1,032 (1BR); 1,032-1,593 (2BR) Available: 1 Quality: Recent Pricing: $260,000 (1BR); $320,000-$489,000 (2BR) Price/SF: $249 (1BR); $218-$364(2BR)

Amenities: Convenient access to commuter rail, covered and surface parking, balconies, river views, wood floors.

Comments: Newly built one and two-bedroom condominium flats located on Norwalk River. Facility has easy access to commuter rail and Interstate highway. All units sold within five months (average 11 per month).

COMPARABLE 6 Type: Condo/Flat Name: Mallard’s Landing Address: 97 Richards Avenue Town: Norwalk, CT Year Built: 1988 Total Units 120 (All 2BR) Unit/SF: 1,196 SF Available: 2 Quality: Very Good Pricing: $319,000-$364,500 Price/SF: $267-$305

Amenities: Pool, balconies and decks, carports and surface parking, convenient access to local shopping.

Comments: Nice condominium development located in a wooded setting within walking distance to local shopping. All units have two bedrooms and two baths. Only two available units are currently listing for $355,000 ($295/SF) and $359,000 ($299/SF).

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COMPARABLE 7 Type: Condo/Flats Name: Stone Wood Address: 100 Richards Avenue Town: Norwalk, CT Year Built: 2005 Total Units 54 Unit/SF: 935-1,100 (1BR); 1,100-2,005 (2BR) Available: None Quality: Recent Pricing: $350,000-$375,000(1BR); $335,000-$595,000 (2BR) Price/SF: $318-$401 (1BR); $296-$346 (2BR);

Amenities: Fitness room, garage parking, granite counters, located close to shopping.

Comments: Newly built flat-style condominiums located immediately adjacent to local shopping in suburban location.

COMPARABLE 8 Type: Condo/Townhouse Name: Pine Brook Address: Pine Brook Lane Town: Darien, CT Year Built: 1987 Total Units 20 (6 1BR, 14 2BR) Unit/SF: 797 (1BR); 1,278 (2BR) Available: 1 Quality: Very Good Pricing: $632,000-$695,000(2BR) Price/SF: $494-$573 (2BR)

Amenities: Central air conditioning, attached garage, security system, deck, hardwood floors, fireplace, adjacent to tennis courts and ice arena.

Comments: One and two-bedroom units with two bedroom units having two and one-half baths. Conveniently located near Route 1, Interstate 95 and local shopping. Only available unit listing for $716,000 ($578/SF) includes two bedrooms, newly remodeled kitchen and whirlpool bath.

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COMPARABLE 9 Type: Condo/Townhouse Name: 222 Riverside Address: 222 Riverside Avenue Town: Westport, CT Year Built: 2006 Total Units 15 Unit/SF: 1,271 (2 BR) Available: N/A Quality: Recent Pricing: $865,000 Price/SF: $681

Amenities: Central air conditioning, riverfront location, single car garage, surface parking, close to Interstate highway

Comments: Brand new townhouses located adjacent to river and park.

COMPARABLE 10 Type: Condo/Flats Name: 124 Riverside Address: 124 Riverside Town: Westport, CT Year Built: 1980 Total Units 4 Unit/SF: 1,200-1,800 (2BR) Available: None Quality: Very Good Pricing: $453,000-$729,000 Price/SF: $372-$398

Amenities: Riverfront location adjacent to park and close Interstate highway, gravel surface parking.

Comments: Well maintained two bedroom units in small building in quiet, tree-lined neighborhood adjacent to river. Unit sold in 2004 for $453,000 ($372/SF) and a recent 2005 sale for $729,000 (398/SF).

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COMPARABLE 11 Type: Condo/Townhouse Name: 442 Main Street Address: 442 Main Street Town: Norwalk, CT Year Built: 2006 Total Units 23 Unit/SF: 2,100-2,600 (2+BR) Available: 18 Quality: Excellent Pricing: $599,000-$869,000 Price/SF: $230-$334

Amenities: Hardwood floors, granite counters, fireplace, radiant floor heat, central vacuum, garage parking, high-end kitchen finish, skylight. An optional elevator is available for some units.

Comments: Luxury townhouse units currently under construction near Merritt Parkway and close to Interstate 95. Construction is not complete; however, according to sales agent, five units are currently under contract. Development targeted at corporate buyers, mobile couples and investors.

5. Conclusion Norwalk is currently the focal point of condominium development activity within the PMR with over 180 units currently being built. Real estate agents and brokers indicate that units in these new developments are selling at an average rate of five to ten units per month per development with many developments being 50% pre-sold before construction is complete. Based on an average absorption of five units per month per new development, evidence suggests that the 864 units contained within twelve condominium developments currently within the permitting pipeline would be absorbed in about 14 months11.

As indicated earlier, Norwalk’s recent condominium market activity is not indicative of past activity (prior to 2000) with recent upturns in pricing (increasing at 16% per year since 2000) and volume (increasing at 5% per year since 2000) clearly showing that Norwalk is a desirable destination for condominium buyers. This notion has been echoed by recent transaction activity as well as many brokers who indicating that Norwalk has an advantageous location relative to transportation infrastructure (I-95 and commuter rail), as well as more affordable price points (compared to other PMR communities and those within the New York City MSA).

With Norwalk currently capturing 86% of condominium sales within the PMR, and very little (if any) developments currently within the permitting pipeline in the other PMR communities, it is unlikely that the other PMR communities will present any future competition to Norwalk relative to development activity. Furthermore, barring any significant rises in interest rates, or unforeseen catastrophic economic conditions, the

11 Assuming the units were built and available for immediate occupancy.

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demand for condominiums in Norwalk should remain strong over the next one to three years. The strong demand for condominium units and corresponding influx of new households should be reflected in both the next decennial census, as well as increased spending at local retail and service establishments.

As shown in the Table 21, including the proposed 650 units at the two development sites within Norwalk’s existing condominium permitting pipeline, the pipeline increases to over 1,500 units. Based on recent historic absorption of about 150 new units per year, the pipeline represents approximately ten years of supply. However, based on sales in condominium projects that are currently under construction, this pipeline may represent approximately five years of supply (including permitting and construction time).

Table 21. Norwalk Condominium Market Absorption Estimate Units in Pipeline 864 Proposed Units at Development Sites 650 Total Pipeline and Proposed Units 1,514 Estimated New Units Sold in 2005 150 Slow Track Absorption Period [1] 10 Years Likely Absorption Period [2] 5 Years [1] Based on historic absorption trends [2] Based on current sales activity

B. Modern Rental Sector Selected rental residential market indicators and comparables are presented next.

1. Recently Approved or Pipeline Projects The modern rental sector expanded by nearly 440 units (including yet un-built units approved for construction) in the primary market region in the past few years. Over two- thirds of the apartments added to the regional supply were contained in the Avalon New Canaan and Avalon Darien developments built in 2002 and 2003. The largest apartment development, which has been approved but yet to be built, is the Maritime Apartments in Norwalk’s SoNo district that will add 136 units to the rental stock. According to municipal officials, there are another 392 rental units currently within the permitting pipeline within the primary market region. Outside of the forty proposed affordable rental units in Westport, all of the rental units within the pipeline are proposed for Norwalk (including a 312-unit Avalon development on Belden Avenue and a forty-unit development on Fair Street).

2. Pricing and Availabilities RKG contacted rental property managers and leasing agents at all of the modern rental properties in order to gauge the current level of availability and pricing. Based on the interviews, the modern rental market appears strong and most properties have occupancy in the mid-90% range, suggesting quick absorption in light of the construction activity. Current conditions at these projects are summarized in Table 22.

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Table 22. Modern Apartment Rental Characteristics (February 2006) Comparable # A1 A2 A3 A4 A5 Avalon Darien Avalon New Merritt River Complex Riverview Corset Factory [1] Canaan [1] Apts.

Community Darien New Canaan Norwalk Norwalk Norwalk Year Built 2003 2002 2002 1991 1881 Total Units 189 104 227 92 80 Occupancy 95+% 98% 93% 98% 99% Rate Unit Size in SF Studio 652 One-Bedroom 783 - 1,112 905-1,440 710-986 850-1,125 1,100 Two-Bedroom 1,263-1,726 1,188-1,925 1,019-1,432 975-1,200 1,025 Three-Bedroom 1,439-1,952 1,332-2,185 1,338-2,042 Monthly Rent Studio $1,325-$1,425

One-Bedroom $2,138-$2,765 $2,340-$2,900 $1,700-$2,150 $1,510-$1,700 $2,100

Two-Bedroom $2,808- 3,113 $2,640-$3,463 $2,200-$2,875 $1,650-$1,815 $1,875-$2,100

Three-Bedroom $3,325-$3,763 $3,300-$4,443 $3,800-$4,500 [1] Rental Concession of two months free rent with 12 month lease Source: Property Managers, Online Sources and RKG Associates, Inc.

As shown above, monthly rents for studio units (which are not common in any of the comparable properties) are between $1,325 and $1,425, equating to between about $2/SF to $2.20/SF. One-bedroom units range from a low of $1,510 to a high of $2,900, equating to between $1.50/SF and $2.70/SF. Rents for two-bedroom units range between $1,650 and $3,463, or roughly $0.90/SF to $2.20/SF.

Rents for three-bedroom units range between $3,300 and $4,500, or roughly $2.00/SF to $2.85/SF. Rental concessions were indicated at both of the Avalon properties. According to development officials, the newest addition to the rental market (the Maritime Apartments - to be completed by 2007) will consist of approximately 102 one- bedroom units (renting for between $1,700 and $2,000 per month) and thirty-four two- bedroom units (renting for between $2,400 and $2,800 per month)12.

Based on the rental information provided, and assuming that these rent levels do not change, the rents at this development will be within the market range as per comparable properties within the primary market region. The occupancy rate from these projects ranges from a low of 93% (Merritt River Apartments) to 99% (The Corset Factory), while most are in the mid-90% range (generally considered near full occupancy).

Map 3 shows the location of each of the comparable apartment developments.

12 10% or 13 units will be designated as affordable units.

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3. Conclusion The rental market in the region experienced expansion in the last few years, and new construction continues. All of the development activity in the region has taken place outside of Norwalk; however, the approval of 136 units in Norwalk (to be completed in 2007) reverses this trend. These modern projects establish new standards in rent levels for the region, as exemplified by two-bedroom rents ranging between $1,500 and $3,460 per month, and three-bedroom rents peaking at $4,500 per month. Rental concessions such as two months rent-free are also evident at some developments. Occupancy rates are reported in the mid-90% range at many of the developments, suggesting strong demand.

In the primary market region, another 400 rental units are reported in the pipeline, which represents about 90% the amount constructed in the last few years. However, while development activity over the past few years has been primarily outside of Norwalk, this trend will reverse. These pipeline projects, when added to the supply of units currently under construction (or approved but not yet built), suggest a supply of more than 520 units.

Anecdotal information provided by property managers at the comparable rental properties indicated there is demand for high quality product (in terms of interior and development amenities), located close to employment centers and/or transportation corridors (both rail highway) within the regional market. Furthermore and generally speaking, prospective renters are spread between two demographic groups including young professional couples or singles, and “empty nesters” or “near seniors” (couples or individuals between the ages of 55 and 64).

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VI. APPENDIX The following data sources and information were used in the preparation of this report:

ƒ City of Norwalk ƒ Connecticut office of Geographic Information Systems ƒ Connecticut Office of Policy and Management ƒ DemographicsNow ƒ National Research Bureau ƒ U.S. Census Bureau ƒ U.S. Census of Retail Trade ƒ Interviews with various real estate agents, brokers and property managers ƒ Warren Group Information Services ƒ DemographicsNOW ƒ Claritas Information Services ƒ Urban Land Institute ƒ Others as cited throughout the report and in various tables, figures and maps

Various previous reports and analyses were also reviewed and referenced as a part of this current research effort. These include, but are not necessarily limited to the following:

ƒ Urban Renewal Plan for the Reed Putnam Area, Norwalk, Connecticut, as prepared by Cecil & Rizvi, Inc. ƒ Draft of the Norwalk Redevelopment Agency Reed Putnam Office Development Feasibility Report, Fairfield County, Connecticut, December 2005, as prepared by United Systems Integrators Corporation. ƒ City of Norwalk Consolidated Plan for Housing and Community Development 2005 – 2009, as submitted by the Norwalk Redevelopment Agency ƒ Norwalk A Community of Neighborhoods Draft for Public Comment, 2002 Housing Needs Assessment, as prepared by the Norwalk Housing Partnership, April 2003 ƒ Memorandum from the Pinnacle Advisory Group (December 200%, to the Norwalk Redevelopment Agency, regarding a Proposed Full-Service Hotel within Reed Putnam ƒ West Avenue Corridor Redevelopment Plan, as prepared by the Norwalk Redevelopment Agency, January 2006

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Appendix Table 1 presents a more detailed inventory of the various shopping centers and plazas in the Norwalk market area and along the I-95 coast.

APPENDIX TABLE 1 SHOPPING CENTER INVENTORY

Center SF Center SF Norwalk, CT Amazing S/C 50,000 Westport, CT Birchwood Corners 15,000 Broad River North Plaza 22,500 Colonial Green S/C 26,000 Broad River South Plaza 21,000 Compo Acres 38,600 Hancock Center 53,000 Compo S/C 75,000 Center Seven S/C 35,000 Food Emporium Plaza 35,000 Darinor Plaza 150,000 Green Farms Plaza 32,000 Golden Crest Plaza 25,000 Jennnings Plaza 25,300 Loehmann's Plaza 100,000 Main Street Commons 10,500 Main Avenue Shopping Plaza 150,000 The Market Place 32,000 Minoff Plaza 8,000 Playhouse Square S/C 40,000 Nobody Beats the Wiz Plaza 100,000 Post Plaza S/C 75,000 Norwalk Plaza 23,000 Riverside Corners 12,000 Parkway Plaza S/C 15,000 Sconset Square 35,000 Perry Plaza 15,000 Turkey Hill S/C 20,000 Petco Plaza 30,000 Post Road S/C 10,000 Plaza Mia 10,000 Saugatuk Ave S/C 15,000 Rainbow Plaza 32,000 Shaw's 60,000 Riverview Plaza 122,000 Westport S/C 95,000 Scribner Corners 30,000 Subtotal 651,400 Shop Rite Plaza 120,000 SoNo Plaza 80,000 Darien, CT Goodwives S/C 95,200 Tower Plaza S/C 25,000 Norton Heights S/C 50,000 Costco 160,000 Subtotal 145,200 WalMart S/C 160,000 Walgreens 20,000 Bridgeport, CT Brookside S/C 150800 Subtotal 1,556,500 Fairview Plaza 32,300 Merritt Plaza 24,000 Wilton, CT Gateway S/C 82,500 Shoppers Plaza 200,000 Georgetown Plaza 32,000 Subtotal 256,300 Kent Centers 25,000 Old Post Office Square 12,000 Greenwich, CT Greenwich Avenue Center 150,000 Town Green 35,100 Greenwich Financial Center Shops 89,400 1 Danbury Road 54,000 Pickwick Commons 25,000 74 Old Ridgefield Road 22,000 Stop & Shop S/C 45,000 15 River Road 120,000 West Putnam Avenue Center 26,000 33 Danbury Road 20,000 East Putnam Avenue Center 18,100 Village S/C 30,000 Subtotal 353,500 Wilton Campus Shops 58,000 44 Piersall Center 10,000 Stamford, CT Bull's Head S/C 29,000 Subtotal 500,600 Chimney Corners 13,600 Clarks Hill Plaza 22,000 Milford, CT Adams Market Plaza 50,000 Glenbrook S/C 100,000 Barter Network Plaza 15,600 High Ridge Center 89,000 Corso Plaza 14,000 Landmark Square 25,000 Germans Plaza 15,000 Newfield Green S/C 100,000 Gloria's Garden View Shoppes 35,000 Ridgeway S/C 400,000 Liberty Rock S/C 180,000 Signature Place 71,000 Melba Shopping Plaza 7,000 Stamford Town Center 861,000 Milford Factory Outlet 48,000 Subtotal 1,710,600 Milford Plaza 168,300 Milford Shopping Center 23,000 Stratford, CT Colonial Square 14,200 Naugatuck Avenue S/C 20,000 The Dock 275,000 Stockdale Shoppes 18,000 Merchants Walk S/C 33,000 Tower Plaza 60,500 Oronoque Shoping Plaza 33,000 Turnpike Square 105,600 Paradise Shopping Plaza 14,000 New Haven and Pond Point Rds 8,500 Stratford Plaza 65,000 Walnut Beach S/C 25,000 Stratford Square 160,200 Waterview Plaza 25,000 1345 Barnum avenue 12,000 Westfield Shoppingtown Connecticut Post 1,014,600 3355 Shopping Plaza 8,500 Subtotal 1,833,100 Subtotal 614,900

Trumbull, CT Hawley Lane Mall 215,600 Fairfield, CT Black Rock 60,000 Town Hall Plaza 92,000 Firfield Center 55,000 Trumbull Center 80,000 Fairfield Centre 8,000 Trumbull Park Business Center 26,000 Fairfield Green Center 6,000 Westfield Shoppingtown - Trumbull 1,194,000 Fairfield S/C 73,600 Subtotal 1,607,600 Fairfield Woods Plaza 35,000 Fairway Plaza 12,000 TOTAL SF 9,975,300 Harry's Corner 15,000 Heritage Square 52,000 Source : National Research Bureau and RKG Lake Hills 38,500 Marshalls 58,000 Post Road 24,200 Staples 45,000 Stop and Shop 95,300 Tunxis Hill 40,000 Turnpike 100,000 2505 Black Rock 8,000 White Birch 20000 Subtotal 745,600

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Appendix Table 2 presents a more detailed estimate of the year 2010 supportable retail SF of additional development that could be supported by a recapture of the sales leakage from existing area households.

APPENDIX TABLE 2 Sales Leakgae Analysis and Supportable Retail Norwalk, CT 2010 Unmet Supportable SF for 2010 Store Type/Merchandise Line and Code Demand Low Medium High

Furniture Stores-4421 $7,300,916 8,105 10,806 13,508 Paint and Wallpaper Stores-44412 $3,312,450 4,938 6,584 8,230 Hardware Stores-44413 $12,270,882 18,292 24,389 30,487 Other Building Materials Dealers-44419 $63,471,866 41,395 55,193 68,991 Outdoor Power Equipment Stores-44421 $3,353,083 4,374 5,831 7,289 Nursery and Garden Centers-44422 $16,051,337 20,937 27,915 34,894 Specialty Food Stores-4452 $13,133,149 7,213 9,617 12,021 Pharmancies and Drug Stores-44611 $16,567,806 11,226 14,968 18,710 Cosmetics, Beauty Supplies, Perfume Stores-44612 $2,307,269 1,770 2,360 2,950 Optical Goods Stores-44613 $1,659,758 1,519 2,026 2,532 Other Health and Personal Care Stores-44619 $499,152 521 694 868 Women's Clothing Stores-44812 $5,646,063 7,752 10,336 12,920 Family Clothing Stores-44814 $3,907,146 4,633 6,177 7,722 Clothing Accessories Stores-44815 $1,290,506 1,683 2,244 2,805 Other Clothing Stores-44819 $4,588,593 4,788 6,384 7,980 Shoe Stores-4482 $5,279,643 7,249 9,665 12,082 Jewelry Stores-44831 $4,830,101 2,653 3,537 4,421 Luggage and Leather Goods Stores-44832 $701,224 732 976 1,220 Musical Instrument and Supplies Stores-45114 $2,431,626 3,094 4,126 5,157 Prerecorded Tapes, CDs, Record Stores-45122 $1,560,056 1,938 2,584 3,230 Department Stores Excl Leased Depts-4521 $139,515,029 76,622 102,162 127,703 All Other General Merchandise Stores-45299 $5,154,403 3,842 5,122 6,403 Florists-4531 $5,403,196 7,831 10,441 13,051 Gift, Novelty and Souvenir Stores-45322 $9,805,400 17,053 22,737 28,421 Used Merchandise Stores-4533 $86,209 90 120 150 Full-Service Restaurants-7221 $26,895,596 17,113 22,817 28,521 Limited-Service Eating Places-7222 $52,105,731 26,653 35,537 44,421 Special Foodservices-7223 $4,886,847 4,249 5,666 7,082 Drinking Places -Alcoholic Beverages-7224 $12,675,299 8,818 11,757 14,696

TOTAL $426,690,336 317,080 422,773 528,466

Source : Us Census of Retail Trade, Claritas, ULI and RKG

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