SOM Students Get Up-Close Look at Real Estate Development
The plot at the corner of Chapel and State streets had stood vacant for decades, a parking lot where a building should be. When New Haven finally requested proposals from developers four years ago for its redevelopment, a number stepped forward with plans to transform the 1.5-acre block of asphalt, where the old Shartenberg department store had once stood, into a signature building for downtown. The winner, Bruce Becker SOM/ARC '85, sold city officials on a 30-plus-story apartment tower with retail on the ground floor, including a grocery store, a key ingredient for a downtown currently without a full-service supermarket.
Three years later, Becker, the CEO of Becker + Becker, stood in the sixth-floor gathering room at 360 State, the new 32-story tower his firm designed and built. He spoke of his quest to create a building that would add 500 luxury apartments (50 of which are for affordable housing) to the city while serving public needs for a grocery store and parking, all while being in the state's greenest mixed-use complex. Outside, workers put the finishing touches on a huge terrace boasting an expansive lawn with views of downtown and a yet-unused swimming pool. Joining him in his presentation before members of the Yale SOM Real Estate and Economic Development clubs were two other SOM graduates and one current student who have played roles in bringing the project nearly to completion: Elizabeth Grossman '05, Lise Dondy '90, and Josh Brau '12. "There's a theme here," Becker told the group. "The most competent people are SOM graduates and students —360 State is a case study in what you get when creative ideas and creative people come together."
The event, held on November 12, was a chance for Becker to show off his new building to SOM students interested in real estate and development. The third building in Connecticut to receive Platinum LEED designation for energy impact and efficiency, 360 State uses half the energy of a conventional building, he told the group. A fuel cell in the basement provides electricity; the heat created by chemical reactions in the fuel cell gets redirected to the building's heating and hot water. Dondy, who recently retired as head of the Connecticut Clean Energy Efficiency Fund, a state initiative to help make residents, government, and business more efficient, played a key role in securing money to purchase and install the fuel cell, which uses hydrogen and natural gas to create electricity. Becker said that the cell is the world's largest in a mixed-use building and credited Dondy's aid for helping the building produce zero carbon and pollution.
He also pointed to the contributions of Grossman in helping to get the project rolling when it could have become bogged down in bureaucratic wrangling. Grossman works as a consultant to New Haven and was asked to help find prospective developers for the Shartenberg site. She wrote the "request for proposal," a document outlining the city's requirements for a new building, which included a desire to maximize taxable use, take advantage of the commuter rail station across State Street, and have a grocery store, public parking, and first-floor retail. Nine proposals came in, each with different advantages and disadvantages. Some designs were more attention-grabbing, but, Grossman said, Becker had a key advantage in his relationship with a union pension plan, which would provide the bulk of the financial backing. "In a union-friendly city like New Haven it was very helpful," she said. Convinced his was the best proposal, city aldermen voted to sell the plot to Becker for $1, while throwing in some money for streetscaping and affordable housing. "The city is going to get one of the highest tax payers with essentially no tax breaks and the developer taking all the environmental risks," she said. "When you think about it, there were a lot of unusual partners in this because everyone really wanted to make it work."
Becker said the building is ahead of schedule in fully renting out the 500 apartments. One major component still not in place is the grocery store. The initial plan to bring in a national gourmet supermarket failed, as retailers balked. When the Shaw's supermarket on Whalley Avenue closed last year, New Haven was left without a full-service supermarket, putting added pressure on 360 State to find not just a grocery store for its ground floor but one that could serve the city's many diverse constituencies. After giving up on bringing in a national chain, Becker and community leaders decided the best way forward was to create a co-op market, which wouldn't be under pressure to turn a profit and could be better able to respond to the needs of the community. The Elm City Market, owned and operated by its members, is expected to open this year.
When Brau read about the co-op in the Yale Daily News last spring, he immediately contacted Becker. Brau was still trying to figure out his summer internship situation, and when Becker offered him a summer position working on the co-op, he jumped at it. "I thought it was really exciting what they were doing here," he said. "They were exploring a truly alternative business model to solve a real problem. I wanted to be involved. I had no idea I'd still be involved six months later."
Brau was sent around the country to visit established co-ops. What he found was that the co-op can be a really powerful business model, but that co-ops tend to thrive best in homogenous environments. "New Haven is really diverse, and there's a tendency for people to think everyone wants what you want," he said. "But we've got a really good group working on this and I'm hopeful that it will not only succeed but will serve as an anchor for downtown and improve the quality of life for people."
Becker said he thinks—and that a marketing study has shown—that the Elm City Market will be the most successful grocery store in New England. "We'll be able to do $10 million in sales right off," he said. "We know the dollars are here." He added that the creativity with the co-op reflects all the work that turned a lot whose last commercial tenant closed more than 40 years ago into the biggest downtown development in a generation. "Sometimes things only work if you do it in a big way," he said.