The mom and pop stores that have populated the Hartford region for years are facing a crisis.
With a slow economy and rapidly rising fuel costs, the small retail business appears to be crumbling while goliaths like Target sweep up the remnants.
“It’s just a lot of smaller, non-descript retail that is going out of business,” said Bob Sheehan, vice president of research for KeyPoint Partners. “We’ve seen it in other areas, especially eastern Massachusetts, with stores that are smaller and have become obsolete.”
The retail leasing and research company last week released its 2007 report for Greater Hartford that found retail space of less than 25,000 square feet is becoming increasingly empty.
Sheehan said the reason is not as much to do with the proliferation of chains and big box stores but the overall state of the economy.
“It’s the small independent owner that owns the small shops that has been impacted the most,” he said. “When you look at something like gas prices, that’s going to affect them a lot more than larger stores.”
The numbers back Sheehan’s assertions. Stores with less than 2,500 square feet had a vacancy rate of 9.8 percent, higher than the region’s rate. Stores between 2,500 and 4,999 square feet were at 9.1 percent and figures for all stores smaller than 25,000 square feet revealed more vacancy than a year ago.
But once stores hit the 25,000 square foot mark, it appears occupancy is all but guaranteed. The report found vast improvement for rates up to 200,000 square feet.
Economically Stable
Sheehan said the bigger stores are not necessarily taking the business away from their pint-sized competitors, they are simply in a better position to handle the up and downs of the economy.
“When you have a luxury store, it can absorb a 25 to 30 percent drop fairly easily and can survive it,” he said. “When you’re on an airtight budget, it gets much, much harder to absorb.”
In fact, Sheehan cited the recent drop in sales for giant Wal-Mart as an indication that it is becoming harder for retail to attract and grow their customer base and bottom line.
“I don’t think Wall Street would agree the economy is slumping, but people are not spending as much and they have to start making choices,” he said. “There’s just not enough to go around and it puts them under.”
Overall, the Greater Hartford vacancy rate for the 12-month period ending in Sept. 2006 was at 8.9 percent, down from 9.6 for the previous year.
While certainly good news for the region, Sheehan cautioned that Connecticut’s vacancy rates remain higher than those of eastern Massachusetts and southern New Hampshire.
The cause for Connecticut’s woes can be attributed to the continued decline of business in the city of Hartford, which again saw vacancy rates increase. Hartford’s vacancy rate for retail space stands at 13.1 percent, a figure more than 4 percent higher than the region’s average.
“Generally, the Hartford region’s vacancy rates are a lot higher than other regions and that’s been the recent history,” said Sheehan. “The area has shown improvement but it’s still consistently higher, and a significant part of that is the city of Hartford.”
Only New Britain, with a vacancy rate of 14 percent, was faring worse when it came to putting stores in available space.
Farmington Valley Gains
The report wasn’t all bad news, particularly in the northwest section that includes 11 towns such as Avon, Farmington, Simsbury and Windsor.
The Northwest sector had its vacancy rates drop to 5.9 percent, a dramatic decrease from the 7.8 percent rate for the year ending Sept. 2005. Among individual towns, Farmington ranked first with the highest occupancy rate, with 97.4 percent of its retail space is in use.
