Connecticut Post Regulation Change Application
Total Page：16
File Type：pdf, Size：1020Kb
CITY OF MILFORD PLANNING AND ZONING BOARD SEPTEMBER 15, 2020 PUBLIC HEARING Connecticut Post Regulation Change Application 1 City of Milford Planning and Zoning Board Connecticut Post Regulation Change Application September 15, 2020 Public Hearing KEY FACTS Malls and Brick & Mortar Retail’s Uncertain Future Pg. 3-4 Negative Macro Retail Trend Impacts on Connecticut Post Pg. 5 Other Negative Impacts Facing Milford Pg. 6 COVID Impacts on Malls and Brick & Mortar Retail Pg. 7-8 Centennial’s Vision for the Future Pg. 9-10 Economic Benefits for Milford Pg. 11 Complimentary Uses as the Most Viable Option for the Future Pg. 11-14 Appendices Annotated Proposed Text Changes Pg. 15 Municipal Fiscal Impact Analysis Pg. 24 Relevant News Articles Pg. 53 2 Brick and mortar retailers – especially in malls – face an increasingly uncertain future Well before COVID-19 turned the world upside down, retailers were fighting to compete due to the dramatic increase in online shopping. E-commerce has already had major impacts on brick and mortar retailers, with record numbers of small and large retailers across the country closing or declaring bankruptcy. Unfortunately, the rise COVID-19 is compounding these challenges. An estimated one quarter of malls across the country will close in the next three to five years. More than half of department stores in America’s malls are expected to permanently close by 2021. In 2019, retailers closed more than 9,000 stores, a 59% increase from the previous year. Analysts estimate that 15,000 stores will close permanently in 2020, a number that could go even higher depending on the duration and impacts of COVID. THE BOTTOM LINE: Unless mall owners and brick and mortar retailers can successfully evolve, many will disappear – as will the millions of dollars in tax revenues and thousands of jobs they provide. 3 National Trends indicate A complicated Future For Malls And Retailers Across the Country THE BOTTOM LINE: Today’s malls were built for yesterday’s consumers. Changing shopper behaviors, increased retailer bankruptcies and limited retailer expansion plans require mall owners to reimagine existing projects into 18-hour a day live, work, play, shop, dine, entertain places that serve tomorrow’s customers and the communities they where they reside. 4 Connecticut Post is not immune to the unprecedented challenges FACING the retail industry Since acquiring Connecticut Post in 2015, Centennial Real Estate has consistently invested in keeping the property’s retail and restaurant tenants fresh, adding national names as well as locally owned businesses. The mall is already struggling with the ripple effects of national retail trends, with adverse outcomes right here in Milford. Connecticut Post has experienced a 20% drop in visitors over the past five years. While we constantly work to find new tenants, it is becoming increasing difficult to find tenants who want to locate in enclosed malls. In fact, since 2017 alone, more than 25 permanent tenants have left Connecticut Post. 5 The damaging effects of national retail trends threaten both Connecticut Post and its contributions to the City of Milford. Declining numbers of shoppers and stores closing at a record-breaking pace mean reduced economic activity, increased job losses, and significantly reduced tax revenues in Milford. Over the last 10 years, (2010 – 2019) the mall’s assessed value has dropped from $176,390,000 to $149,099,000. Adjusted for inflation, the 2010 value of $176,390,000 is equal to $206,806,225 in 2019 dollars. This means that in just the past 10 years the mall lost $57,707,225 in value, a 28% depreciation. Malls are already failing in Connecticut, resulting in revenues evaporating for their communities. Enfield Square Mall sold for $82,037,420 in 2006 and again for $11,392,500 in 2019, depreciating 86% in 14 years. Enfield Square was assessed at $19,263,460 in 2017, then depreciated to $9,667,020 in 2019, a 50% drop in just two years. COVID-19 will contribute to substantial further drops in retail property values at an increasingly rapid pace. 6 Without new investment and a new approach, Connecticut Post’s property value will continue to decline, resulting in millions in lost taxes for Milford. Based on the continued decline in brick and mortar retail & enclosed malls, it’s conservative to project that Connecticut Post will depreciate by an additional $57,707,225 over the next 10 years or $5,770,722 per year. A depreciation of $5,770,722 per year equals a loss of $159,906 in tax revenue every year to Milford. COVID-19 will speed up the decline in retail property values. With COVID accelerating the evolution of the retail sector, it is plausible to project that Connecticut Post will depreciate $57,707,225 within the next 2-3 years. That means Milford would face a loss of up to $1,599,067 per year in property tax revenue within three years. THE BOTTOM LINE: The City of Milford is at risk of losing nearly $1.6 million in property tax revenue annually if Centennial cannot apply its proven approach to transforming underperforming retail real estate into a dominant mixed-use destination. 7 COVID continues to have wide ranging impacts across retail, causing thousands of store closures and job losses. Between January and June 2020, an estimated 3,600 companies have filed for bankruptcy, many of whom are retailers operating multiple locations. • JC Penney, which filed in May 2020 estimated that 154 of its stores will close their doors. • Vitamin retailer GNC filed in June 2020 and plans to close 1,200 of its stores. While the year is not yet over, 2020 has already seen many high-profile retailers, restaurants and consumer service companies file for bankruptcy including: • Lord & Taylor • JC Penney • Neiman Marcus • Hertz • Tuesday Morning • Chuck E Cheese • New York & Company • Gold’s Gym • Lane Bryant • California Pizza Kitchen • Sur La Table • Pier 1 Imports • Brooks Brothers • True Religion • Modell’s Sporting Goods • Lucky Brand • Tailored Brands (Men’s Wearhouse, Jos. A. Bank) 8 Centennial’s vision: Invest for the short- and long-term success of the project and city, beginning with a luxury residential community. Centennial is proposing a regulation amendment to facilitate a residential community located on the southeast corner of the mall's parking lot. The conceptual residential community includes approximately: • 135 one bedroom units • 135 two bedroom units • 30 three bedroom units The residential community at The Post will expand housing options for Milford residents. Examples of architectural design. CREDIT PERKINS EASTMAN CREDIT ARROWSTREET CREDIT ARROWSTREET 9 10 POTENTIAL FUTURE PHASE PUBLIC SPACE EXAMPLE Centennial’s vision: Invest for the near- and long-term success of the mall starting with a luxury residential community. Additional components of the mall will also be redeveloped in the future to transform the mall into a modern, mixed-use property. Centennial looks forward to partnering with the city and other stakeholders to craft a shared vision, custom and unique to the property and the Milford community. POTENTIAL FUTURE PHASE PUBLIC SPACE EXAMPLE – NIGHT VIEW The Bottom Line: In order to craft a shared vision for the long- term future, Centennial must first stabilize the property in the near term with the addition of a vibrant, luxury residential community. 11 of a vibrant, luxury residential community. A residential community at Connecticut Post Mall will bring significant economic benefits to Milford. Contributing an estimated $1,215,244 in new combined real and personal property tax revenues to Milford each year, a 28% increase over the taxes currently paid. Generating and/or sustaining an estimated 372 construction jobs Generating and/or sustaining an estimated 117 permanent jobs in the region Generating an estimated $34.8M in new wages with an increase of $1.2M in local consumer spending The Bottom Line: A residential community at Connecticut Post will deliver millions in new revenues, and ensure the mall continues to be the City of Milford’s largest taxpayer. 12 Residential is the most viable option to stabilize the mall and lay the groundwork for the future. Centennial engaged Goman & York, a leading Connecticut real estate economic analysis firm to gather current data on prospective alternative uses at the property. General Office • Milford supply is outpacing demand with approx. 500,000 s.f. in commercial space for lease/sale, even considering COVID related relocations out of NYC. • Rents below $30 per sq. ft. = returns that do not justify new construction. Under these current conditions, developers would not build office space in Milford. Medical Office • There is an abundance of Medical Office space in Milford– approx. 34,000 s.f. listed for lease/sale. • Market rents – approx. $20/square foot make returns so low that construction costs exceed the return on rent. Under these current conditions, developers would not build medical office space in Milford. Hotel • With several hotels and lodging options in a 10-20-mile radius of Milford, the investment would not generate a return. • Construction costs exceeds return on rent for hotels. • Hotel development is risky, which makes it challenging to attract investment. Under these current conditions, developers would not build a hotel in Milford. Commercial/Industrial Flex Space • There is nearly 450,000 square feet listed for lease or sale in the area. • With rents between $5.50 and $12.50 per s.f, the returns are too low to attract investment. Under these current conditions,