Burlington sees boom office, retail remain stable

Vermont Business Magazine, Apr 01, 2004 by Brush, Cassandra Hemenway

Perhaps by bringing in 115,000 visitors to Burlington in its first year, e city's new waterfront museum, ECHO, has contributed to the region's commercial real estate boom. Or perhaps it's the recent addition of a state-of-the-art fiber optic network, or maybe it's the constant expansion of Fletcher Allen Medical Center, and the University of Vermont.

Whatever the reason, Burlington has been experiencing an explosion of commercial developments.

"Occupancies are high, vacancies are low," said Bill Suglia, senior vice president of Citizens Bank, which recently opened a branch office dedicated solely to real estate in Burlington.

Headquartered in Providence, RI, Citizens operates throughout New England. Burlington has the lowest vacancy rate for commercial real estate than any of the other rural New England states, Suglia said. He cited a 5 percent vacancy rate in Burlington, compared to 15-20 percent in southern New Hampshire, and 6 percent in Portland ME.

Indeed, said Bruce Seifer, Assistant Director for Economic Development for Burlington's Community and Economic Development Office, "We have the lowest commercial, retail vacancy rates in the county."

Business is only getting better.

"It's very, very busy," Seifer said. "I think people are investing in real estate for a number of reasons. Their businesses are expanding, or there's a good climate in our community where they can get a reasonable return on their investment. I think people see this as a steady income for them."

An office building retail complex, 18-years in the planning, has finally reached construction stage. The $10 million project, which will include a movie theater on the corner of Lake Street and College Street, will add 12,000 square feet of park land, and provide retail fronting on Battery street.

"So you can shop on Battery Street then go down to the Waterfront," said Seifer. The project is due to be completed in July 2005, he said.

Other projects recently having completed the city's permit process include:

* General Dynamics' 50,000-square-foot expansion on Lakeside Avenue. The company plans to hire 180 engineers at an average salary of $80,000.

* A new student life complex and a new business school at Champlain College. The $4 million project is currently under construction.

* Fletcher Allen's 350,000-square-foot expansion, which includes a new birthing center; plus its $1.5 million 16-room cancer rehabilitation facility called "Hope Lodge" on East Avenue.

* 200 new student apartments on University of Vermont's Redstone Campus, a $12 million project.

* Ryan Electric's 17,370-square-foot office and warehouse extension on Industrial Parkway

* Fletcher Allen's $10 million, 17,000-square-foot mental health facility on Colchester Avenue

* A $6.7 million, 127-room hotel on the corner of Cherry and Battery Street.

* A $1 million, 5,000-square-foot expansion of Gardner Supply's call center and parking lot at its Intervale headquarters.

* A new 5,000-square-foot post office in the New North End to replace the "teeny facility" which has served 10,000 citizens with only one parking space.

A few road projects are in the works as well. They include:

* A total reconstruction of Riverside Avenue. The road will be ripped up and refaced; new sidewalks and curbs are going in.

* A major renovation of Lower Church Street, finally closing off the fourth block to traffic. After the road gets ripped out, the block in front of City Hall will be open to pedestrian traffic only. It will improve business "without a doubt," Seiter assured. "It will increase foot traffic tremendously."

* The long-stalled "Southern Connector" between the interstate System and downtown Burlington is slated for completion. The project is scheduled to start this fall or next spring.

Burlington has other business developments in the works, such as 16-miles of fiber optic line connecting 40 city buildings.

"We have the capacity to add another 40 buildings in town,". Seiter said. "We are now approaching businesses and they are signing up to take advantage of the most advanced telecommunications in the world. We are offering Internet service as well as disaster recovery capacity for businesses."

Seifer said one wireless company has already tapped into the network. Soundtivity.

"We overbuilt (the system)," Seifer said, "because we felt this was a good communication tool."

Steve Allen, of Allen & Brooks, a commercial real estate development reporting firm, reports that all areas of commercial development in Chittenden County remain stable. He said Chittenden County's supply of retail space has expanded, mostly due to a "few large projects representing around 244,000 square feet of new retail space" concentrated in Williston and South Burlington. Retail has grown incrementally, Allen reports.

Vacancies, however, are "below average" partly due to renovations at the Burlington Town Center, formerly the Burlington Square Mall.

"Consumer spending fuels retail sales, and by extension creates demand for retail real estate," Allen said in his annual report. "... Consumer spending has been a bright spot in an otherwise depressed economy during the last few years and this has moderated the severity of the recession as it relates to retail real estate and other sectors of the market."