November 28, 2014

THE HUB: Real estate trends reflect Williston’s character

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By Ethan de Seife

Observer correspondent

August 15, 2013

The last decade has seen the town of Williston emerge as one of the chief economic engines in Vermont, but in many ways the story of Williston’s current success can be traced back almost exactly 50 years ago. November of 1963 saw the opening of the section of Interstate 89 that runs between Richmond and South Burlington. The easy highway access to Williston was the first major step in turning a small farming community into a “destination shopping” location.

If the highway provided the means to get to Williston, the “big box” stores that now thrive in Williston have, in recent years, provided the draw. Such stores pull in Vermont consumers—as well as many from out of state. For major retailers, many of which own stores that take up more than 100,000 square feet of expensive commercial space, the mantra “location, location, location” is especially pertinent.

“There are not a lot of other places [in Vermont] where something like this could happen,” said Greg Dirmaier, broker and vice president with JL Davis Realty of Williston, who has done business in the local commercial real estate market since 1983.

A report published in June 2012 by the South Burlington real estate advisory firm Allen & Brooks indicates that Williston boasts the largest percentage of Vermont’s retail sales, with 28 percent. Burlington, the state’s largest city and a municipality with more than four times Williston’s population, came in third, at 17 percent. (South Burlington placed second, with 24 percent.)

Williston’s recent boom in retail construction was essentially purpose-built: major retailers building those big box stores for immediate occupancy. As a result, the town’s retail vacancy rate is low. Mark Brooks, a principal at Allen & Brooks, noted that further evidence of the strength of Williston’s commercial real estate market is that its retail vacancy rate is lower than that of Chittenden County as a whole—“and the county average is pretty good,” he said.

Brooks noted that Williston has experienced neither overbuilding nor underbuilding. “If anything, and it’s weird to say, there’s actually a capacity for more retail,” he said.

At this point, however, little of any retail construction in the near future will take the form of big box stores, as the town has put a cap on the number of such properties that may be built within its limits. Noting that Williston has “cast its lot” with retail as a means to bolster its tax base, Dirmaier said that, nevertheless, retail construction will “not be as active as in the last 20 years. It’ll be slower and steadier.”

Dirmaier noted that properties such as the City Crossing project, which is now fully permitted, will increase Williston’s retail footprint to some extent in the coming years, but that, at the moment, most of the demand for new construction is occurring at the residential level. Several large, multifamily apartment buildings are already well under construction, not far from Williston’s commercial epicenter.

As well, even Williston’s current array of the biggest of big boxes cannot fulfill the needs of every shopper. Both Dirmaier and Brooks believe Williston to be poised for commercial development at a smaller scale—smaller, more “focused” stores that will cater to local residents rather than to “destination shoppers.”

While retail is the most notable and noticeable development in the Williston commercial real estate market in the last decade, two other sectors of that market—office and industrial—are equally important indicators of economic health. Nicole Senecal, a broker with and owner of Omega Realty, represents 39 commercial properties in the metropolitan Burlington area, 21 of which are located in Williston. (Omega Realty is the landlord of the property at 300 Cornerstone Drive that houses the offices of the Williston Observer.) Senecal noted that the vacancy rate in the office sector is notably higher than in either retail or industrial, suggesting that the market for services is far smaller in Williston than that for retail business. “I’m seeing a few more office vacancies than I’m used to,” Senecal said.

Industrial space, in particular, is in high demand. Omega Realty currently has no industrial properties for lease. Senecal attributed this zero-percent industrial vacancy rate to the fact that industrial space usually carries a lower cost per square foot, and that industrious business owners will often opt for a more affordable space, even if their needs are not strictly industrial.

Mary Lintermann, who works for both property management company Black Dog Holdings and for Engelberth Construction, concurred with Senecal about the difficulties in Williston’s office space market. “The suburban office market is challenged for many people,” Lintermann said.

She also noted, however, that Williston has more than one personality. One of these is serving as northern Vermont’s destination for department-store shopping, but the other is that of the small town, an identity it retains in spite of the explosive growth of national retail outlets. Lintermann cited Williston’s historic downtown and such events as its Fourth of July parade as evidence that the town is more than just a big-box, destination-shopping suburb.

“Has retail changed Williston? Yes—in some ways, permanently so,” she said. “But Williston is a great community. I’m confident that it will come together.”

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