What’s next for Norwalk’s commercial real estate market?

Jhe state of economic development in Norwalk was the focus of a recent event at The SoNo Collection which was organized by the Greater Norwalk Chamber of Commerce in association with the Westport-Weston Chamber of Commerce and sponsored by FLB Law.

Eric Bernheim, managing partner at FLB Law, served as panel moderator and was joined on stage by John Hannigan, principal of real estate brokerage firm Choyce Peterson. Also present were Danielle Dobin and Steve Kleppin, planning and zoning managers for Westport and Norwalk, respectively, along with Kim Morque, president and director of Spinnaker Real Estate Partners, and Alan Webber, chief financial officer of MF DiScala & Co.

Bernheim started the conversation by stating his pride in playing a part in building the SoNo collection itself.

Left to right: John Hannigan, Director, Choyce Peterson; Steve Kleppin, Norwalk Planning and Zoning Commission Director; Danielle Dobin, Westport Planning and Zoning Commission Commissioner; Alan Webber, chief financial officer of MF DiScala & Co.; and Kim Morque, President and Director, Spinnaker Real Estate Partners. Photo by Justin McGown.

“I was special adviser to the city of Norwalk for the SoNo collection,” he said. “We helped them turn what was vacant brownfield for a few decades into a fabulous building that we all enjoy now.”

Bernheim pointed out that there are also more industrial businesses that depend on the area’s real estate, such as oyster companies, which own thousands of acres of farmland along the coast that serve as the base for the festival. Norwalk Oyster Annual. He urged participants to think about the future of real estate in the region as more than one thing.

Bernheim’s first question was to Kleppin, asking him to describe his department’s efforts to accomplish the economic growth that Norwalk has experienced.

Kleppin recalled that he started his current role in 2016 when the SoNo collection was still in the planning phase, which is when the city’s conservation and development plan was about to expire. The result was the need to be operational, but it quickly revealed to him the importance of proactive zoning approaches.

“If anyone has ever looked at Norwalk’s zoning bylaws,” Kleppin added, “you don’t have to look much beyond the surface to realize that they are really complex. They were very sketchy when they have been assembled and haven’t had a complete overhaul for 30 years.

Kleppin said there was a need to update the zoning law, which mimicked what Stamford had explored recently, with multi-family and commercial zones to help develop the city and not just downtown.

Dobin was asked about efforts to expand economic opportunity in Westport and explained her efforts to change regulations that prohibited much development, which has won her praise in the heart of the city.

“There was an idea for a long time that I call the ‘Disneyfication’ of Westport,” Dobin said. “There was support for preserving Westport in amber as some sort of historical artifact, like we were Nantucket. But we’re not Nantucket, we’re part of the Connecticut ecosystem, and a lot of what the commission has been trying to accomplish recently has been to change our regulations to be more flexible.

Webber was asked about the industrial side of the commercial real estate equation and he described a situation that is no different than the rest of the industry. He pointed to his company’s properties in California where vacancy rates are below 1% while rents have increased by more than 50%. At the same time, he notes with industrial real estate “it’s an easy product to manage from a property perspective. Tenants tend to take care of the space, there’s not a lot of maintenance and repairs to be done.

“We really believe that the industry is going to continue to be a big part of our portfolio,” Webber added, noting that much of that demand was driven by recent supply chain shocks, which made l more appealing to many people. businesses since the cost of having products on hand was competitive with the risk of losing business due to unreliable shipping.

Hannigan was asked to comment on how the rise of flexible spaces and hybrid office models has shaped the market. He said it seemed like an exciting opportunity for landlords to snag small tenants in growing businesses that could bring in a growing team.

“I’m hoping they take a three or four person office and, boom, expand and then they’re 10, 12, 15 people,” Hannigan said.

Bernheim then noted that Fairfield County had 17,000 address changes in the past year and noted that “if you ask anyone who’s not in the real estate business, they will tell you that there are too many apartments in Norwalk”.

Morque recalled that at the start of the pandemic, his company anticipated turbulence with rising vacancies and delinquencies, but instead the market provided the exact opposite, largely driven by remote workers who moved from New York.

“We’ve built about 700 units over the past three years,” Morque noted, “and we’ve rented them out very quickly, much faster than expected. So, are there too many? We continue to expect there to be an inflection point and shifts, but we haven’t seen it yet.

Penny D. Jackson