For the time being, it appears New Haven has weathered the economic storm.
While the the national economy flounders through its first official recession since 1991, strong local economic growth over the past several years has New Haven well-prepared for the financially critical holiday season.
The nation’s economic woes began last spring and have been exacerbated in the wake of the Sept. 11 terrorist attacks on the World Trade Center and Pentagon. But local merchants and economic pundits say New Haven has fared remarkably well since Sept. 11, despite the city’s proximity to New York City.
“We’re not seeing any downturn in anything so far,” said Lynn Fredricksen, the director of communications for the Greater New Haven Chamber of Commerce. “We’re still encouraging people to shop downtown. — There’s no reason in the world that people wouldn’t be out shopping.”
Previous economic expansion, particularly downtown, appears to have diminished the recession’s effects on New Haven.
“The new things going on in New Haven seem strong enough to offset the slowdown in the economy,” said Ashley Sheridan, co-owner of both Anna Liffey’s and Celtica.
Despite such optimism, however, the recession has hit New Haven to some extent; certain area businesses cut their staffs following Sept. 11.
For example, cancellations in the days immediately following Sept. 11 cost the Omni hotel over $500,000 and led to 10 pink slips. Overall, the Omni’s September occupancy rate fell 40 percent from last year. A slight rebound in October led to only a 20 percent decline from that month’s occupancy a year ago.
But Mayor John DeStefano Jr. said Monday that New Haven’s economy as a whole only faltered briefly.
“Nationally, everyone says there’s an economic slowdown,” DeStefano said. “But I am not aware, in speaking to New Haven employers, of any significant, measurable changes.”
Formerly a retail ghost town, what is now a more vibrant downtown has attracted the interest of New Haven County’s wealthy households.
“We might be well equipped not to suffer too badly because of the changing perceptions of downtown New Haven,” Sheridan said.
Also, following a national trend, consumers have been unwilling to travel as far for shopping and recreation as they were before the disaster, Fredericksen said. The downtown provides a new destination for these now local shoppers.
“People just aren’t going as far from home,” Fredericksen said.
Accordingly, retail sales in downtown New Haven remain relatively strong.
Chip Croft, the president of the United Merchants Association, which represents nearly 100 downtown retailers, said sales at just a few stores have decreased by as much as 20 percent, while other retailers were experiencing strong holiday seasons.
“Some sales are down from Sept. 11, but it’s very mixed depending upon what the store sells,” Croft said.
In addition, the Town Green Special Services District surveyed about 25 downtown restaurants following Sept. 11 and again in October, revealing that local restaurant business fell after the terrorist attacks but subsequently returned to previous levels.
“A lot of folks consider [restaurant business] a barometer of the economy,” said Scott Healy, the district’s executive director.
Meanwhile, retail vacancies downtown have decreased over the past year. About 20 empty storefronts have gained occupants over the past year, and just two new vacancies have formed, said Andrea Pizziconi, a University Properties financial analyst.
“These guys are movers and shakers,” Sheridan said. “They know what they’re doing and they’re doing it well.”
Pizziconi said about 60 empty retail spaces remain downtown. New Haven, which once had the highest office space vacancy rate in the country during the recession of the late 1980s, still has 14 percent of its offices empty — well above the national average of 10.8 percent, said Carl Traub, president of Traub and Company, a local commercial real estate firm.
Some economists even had suggested the New Haven economy could expand in the wake of the disaster, as the firms that lost office space in the World Trade Center buildings sought to relocate to areas outside New York City.
But the local market for the kind of office space suited to those firms is already saturated, Traub said.
The farthest east most of the companies have been willing to go is Greenwich, just over the Connecticut border, he added.
Several suburban shops have opened second branches downtown since the summer, however, including women’s clothing retailer Maxine and the bar Playwright. Another women’s clothing store, Lulu’s, even relocated from Guilford to Chapel Street.
Retailers already located downtown also are investing in business improvements, despite the nation’s economic woes. A recent surge in applications for the city’s Facade Improvement Program leaves about 40 applications currently pending.
“Even just the amount of developers calling me has increased lately,” Pizziconi said. “Dead projects are not so dead anymore.”