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Dark Stores Haunt Downtown NL

By Karin Crompton

Published August 31. 2008 4:00AM   Updated September 09. 2009 4:19PM

Downtown, where success abuts neglect, one stubborn statistic has plagued the city for decades: one-third of its storefronts are vacant.

Of the downtown's 215 storefronts, 71 are vacant. The empty spaces equal about 150,000 to 200,000 square feet of unproductive slots - enough to fill the cavernous space of a Super Wal-Mart in a downtown that measures only a fifth of a square mile.

On downtown's section of Bank Street, the street-level vacancies number a little under 30 percent. That figure jumps to more than 40 percent on State Street, where businesses survive amid "For Lease" and "For Sale" signs.

"That's pretty damn unhealthy," said Fred Carstensen, an economics professor at the University of Connecticut. "If you had 10 percent, I'd say that's within the range of regular churn. Not 30 percent. That suggests you're having a hard time."

Whether it is the city's negative reputation, strict zoning regulations, perceived lack of parking or the age and quality of the buildings themselves, experts pinpoint areas the city needs to address. Commercial brokers, property and business owners, and retail experts identify a number of hurdles the city faces as it attempts to overcome what has been a chronic problem.

This is not a new issue: Stacks of studies show that the city has had a high rate of vacancies for at least 30 years, with its 26 downtown blocks being analyzed over and over again.

A 1976 plan purported to provide "a coordinated and aggressive effort to re-lease the vacant retail space lining State and Bank streets."

A 1982 study, two years before the Crystal Mall opened in Waterford, reported that 15 percent of street-level retail and service business, totaling 82,000 square feet, was vacant.

Experts say the vacancies depress the market for all businesses.

"It is profoundly corrosive when you get a large concentration of empty properties, and that makes it very hard for the other ones to hang on," said Carstensen, who is also the director of the Center for Economic Analysis at UConn.

Still, some who are involved in downtown's development respond to the one-third vacancy rate more as a fact of life than a chronic drain.

"Suddenly, now, everybody wants the storefronts" filled, said Penny Parsekian, CEO of New London Main Street, the 10-year-old nonprofit tasked with promoting downtown development. "They are something that we need to work on. But it's not something that we need to work on tomorrow."

Parsekian and others point to significant signs of downtown's progress: a revamped, $19 million Waterfront Park, major renovations to some of the city's largest buildings, an energetic arts scene and new ethnic and higher-quality restaurants.

And people are moving downtown as quickly as new housing opens up. In the past decade, developers have renovated or built nearly 200 downtown apartments and condominiums, many of which offer higher-end amenities and command $1,000-plus rents that, only several years ago, would have been unthinkable.

"If you went to New London in 1998 and rode around the downtown, and then you flash forward to 2008, you'd see a gigantic difference," said John Jensen, manager of Pequot Commercial, one of downtown's major brokerage companies.

Still, the "unhealthy" number of vacancies persists, unmistakably evident to residents, tourists and potential business owners.

Where are solutions going to come from?

In May, the City Council decided to oust city development chief Bruce Hyde, who will leave in September after heading the Office of Development and Planning for nearly 19 years. The council has, for now, eliminated the position.

It's not yet clear exactly what councilors will decide to do instead.

Century-old buildings

Two of the fascinating aspects of New London, its architecture and its historic significance, also present stumbling blocks to economic growth.

An aerial view of the central business district looks like a snapshot from the video game Tetris, where all types of shapes, many jagged, L-shaped, or long and skinny, are made to fit together.

Many downtown buildings are smaller than 5,000 square feet, which George Cihocki of U.S. Properties said is smaller than investors are used to. Many are old - well over a century old.

The city is also filled with rehabilitation projects: asbestos, decay, rotted roofs, fire and building code violations.

"All these little issues are things that have to be dealt with by property owners downtown, in all of these buildings," said Lori Hopkins, who owns the Barrows Building at 253 State St. "They put money into it, but it's never enough money."

The city offers about a half-dozen grants and programs - albeit with limited funding - to help with financing of rehab projects.

"To start up a new business and buy new equipment and get started on products and merchandise and that sort of stuff, to add the $50,000 cost to bring it up to code so you can move in there - it's a tough nut to crack," said Ned Hammond, the city's economic development coordinator. "That's just the first floor. You go to the second floor on many of these old buildings and the cost just climbs."

Hopkins had been considering renovating the upstairs of the Barrows Building into apartments or Class A office space, with top-of-the-line amenities and lease rates, before a third-floor pipe burst, damaging it throughout and forcing out a street-level tenant. Now she isn't sure what will go upstairs and is looking for tenants to fill her two street-level spaces after she fixes them up.

"Even an insurance settlement isn't going to pay for what has to be done to bring this entire building up to rentable," she said.

Red tape and hard feelings

The city's zoning regulations include a long list of uses that are allowed downtown, but most businesses must go through a special permit process with an appearance in front of the Planning and Zoning Commission.

That adds legal and engineering fees and time spent at public meetings with the commission.

"I don't know any other town that's so red tape about a business coming in," said Norman Peck III of Pequot Commercial, who is also a longtime member of the East Lyme Planning and Zoning Commission. "That has got to be loosened up."

Mark Christiansen, the commission chairman, said the special permit process of 35 days is shorter than the 45 days most applicants need to wait anyway for state approval to open a business in a coastal area.

Christiansen said the regulations foster public safety by ensuring that nearly every new business goes before the commission.

"Whatever business is going in, we want to make sure that it does not have an adverse effect on the residents of downtown," he said.

Real estate professionals said they and their customers have run into problems with the city's Office of Development and Planning.

Susan Howard, a commercial broker with U.S. Properties, said prospective tenants have mistakenly believed they couldn't come to New London because someone in City Hall told them "no" and didn't instruct them how to apply for a special permit.

"We've met with city people, but they get on the defensive," she said. "We've had them to our commercial brokers' meeting more than once, but it's on the defensive, temper tantrums and walking out on us instead of letting us say, 'We just want to tell you what we're hearing. Why can't we figure out a way to work it out?' But instead we're the enemy. We're the bad people."

"I'm telling you the city bureaucracy has been as often an impediment as a help into getting new businesses in the city, historically," said William Newman of New London's Connecticut Commercial Realty.

Hammond said he couldn't respond to broad-brush generalities and said he's generally had a good relationship with brokers.

"Nobody here, and I can vouch for everybody here," he said of the development and planning office, "is going to tell someone they can't do it when they can. They might tell them what the procedure is and they might decide, 'I don't want to go through that procedure.'"

Hammond said he has done the work of the applicant countless times on city grants and said the city has loosened its zoning regulations to allow more in-house approvals. In February the commission amended regulations to allow more uses within the downtown.

"Is the special permit process cumbersome? Yeah, it takes a little bit more time and more money, but it's a special process and there's a reason for it," Hammond said. "Should that be a reason not to open a business? Absolutely not. If a businessperson cannot handle that type of thing, they should perhaps consider whether they should be in business."

The New London reputation

The city has a reputation: dangerous, unfriendly to potential businesses and development, and short of parking.

"I hear, more often than I want to hear, people calling in and saying, 'I want some space, but I do not want New London, period,'" said Peck, who called the city's image "not justified."

"The biggest problem with New London, I think, is the image, the perception," Peck said.

"Perception," said Rich Caruso, owner of Caruso Music on State Street, "is reality."

Caruso and others said the city still suffers from a reputation earned when it had dozens of bars downtown.

"When I first came on the job in 1974, there were four of us that would walk abreast down Bank Street because there was a fight in every bar," said New London Police Capt. William Dittman. "That's changed drastically."

Dittman said New London has become "more businesslike" and doesn't have any more incidents than surrounding towns. Including murder.

The memories of violence in New London - like an execution-style killing outside Ernie's Cafe in 2007 - seem to hit the city harder than similar incidents in a place like Groton, Dittman said, pointing to murders and attempted murders there.

"What happens in Groton doesn't seem to stay with Groton, but if it happens in New London, it seems to dig up the past," Dittman said.

The calls for service to New London police paint a picture that contrasts with the downtown's reputation. Downtown interaction with police is far more likely to be about parking and driving.

The police department's records show that in the past year people called from downtown locations six times to report robberies and five times to report shots being fired. There were 13 reports of assault and 15 reported burglaries.

The calls do not necessarily mean crimes were committed; they are records of a caller's description of an incident and often turn out differently than first portrayed. For example, police said, calls for shots fired often turn out to be fireworks. The department's computer system was unable to provide records of how many of the incidents called in turned out to be crimes.

During the same one-year period, police wrote 813 parking tickets and made 650 motor vehicle stops. That doesn't count citations from the man whose job it is to write tickets all day; his parking tickets are separate from the tally included in the report of incidents called in by patrolmen.

Dittman said the police and fire departments work with the Planning and Zoning Commission and others to regulate what happens downtown, and it has made a difference. He said the city also has more police officers walking the beat than do surrounding areas.

"The college kids come downtown. They don't know New London's reputation," Dittman said. "They go downtown, they see this place, that place ... they go to Hot Rod's for wings, go here and there, go shopping, they don't think twice."

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