United States -  New Haven - Waterbury

Overview:

New Haven is the second-largest city in Connecticut and benefits from an increasingly diversified economy. While Yale University remains an integral part of the region’s economy, businesses in the fields finance, health care, and professional and business services have grown in importance. Despite this shift, the education and healthcare sectors currently make up approximately one-third of total employment in the greater New Haven market. Combined with the high cost of doing business and stagnant population growth, the metropolitan economy has remained somewhat sluggish in recent years.
 
In an effort to stimulate economic growth, the New Haven Economic & Business Development office has established an ambitious agenda to revitalize numerous neighborhoods throughout the city. The New Haven Downtown Crossing/Route 34 East project is expected to transform the economic and cultural landscape of New Haven by replacing the highway section of State Route 34 with city streets; the project will reconnect the Downtown, Hill, and medical neighborhoods, while also creating approximately ten acres for redevelopment. Other major developments within New Haven include the $140-million medical office building, 100 College Street, which serves as keystone of the city’s Downtown Crossing project; the redevelopment of the former New Haven Coliseum into a 4.5-acre, mixed-use development called “Live, Work, Learn, Play”; the $54-million rehabilitation and conversion of the former Winchester Arms factory into 158 residential units; and the $175-million West Rock residential development. Additionally, the $145-million Edward P. Evans Hall, home to the Yale School of Management, opened in 2014. The City of New Haven is currently implementing a $20-million redevelopment of the River Street section of the Fair Haven neighborhood of New Haven. In the Mill River neighborhood of New Haven, developers are planning a $200-million mixed-use development, complete with a high-end shopping center, dining and entertainment venues, residential units, and a hotel. The project, which broke ground in March 2015, is planned to open in subsequent phases. There is no doubt the diversified and relatively stable area economy is driving the construction.
 
Hotel transaction activity in New Haven County has been limited during the last three years; in particular, only seven transactions, totaling $36,615,210, were recorded during this period. Hotel transactions represented limited-service properties, ranging from $34,000 per key to $66,000 per key. The two largest sales were the Heritage Hotel in Southbury and the Clarion Hotel & Suites in Hamden. The 163-unit Heritage Hotel sold for $7,500,000 ($46,012 per key) in October 2014, while the 103-unit Clarion Hotel & Suites sold for $6,400,000 ($62,136 per key) in January 2015.
 
As demand fundamentals remain positive, supply growth is held in check, and the existing rooms supply is upgraded, the greater New Haven market is expected to realize modest demand growth; moreover, hotel operators are likely to employ aggressive average-rate-growth strategies as economic conditions strengthen. Market-wide occupancy is forecast to remain relatively stable over the next few years, while average rate is anticipated to increase moderately. Therefore, hotels should register multiple years of low-to-mid single-digit RevPAR growth.
 
* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

New Haven - Waterbury United States
Previous Year +1% (44 of 71) +1% (49 of 71)
Growth in 2017 +1% (40 of 71) +2% (36 of 71)
Growth in next 3 years +10% (35 of 71) +10% (36 of 71)

Change In Value For Market:

New Haven - Waterbury RevPAR % Change

For more information, please contact:

Preston Puleo, MAI
ppuleo@hvs.com
  • +1 910 723-3579 (w)
Brian Bisema
bbisema@hvs.com
  • +1 781 454-8930 (w)
Erich Baum, CRE
EBaum@hvs.com
  • +1 603 502-6625 (m)