By Joseph De Avila and Jon Kamp | Photographs by Natalie Keyssar for The Wall Street Journal
WESTON, Conn. -- It took a global pandemic and a severe economic
downturn to do what once seemed impossible: make the Connecticut
suburbs cool again.
Connecticut stumbled in recent decades on a backfiring bet that
people wanted to live in small towns. Instead, young families and
professionals rushed to cities like nearby New York and Boston.
Early this year, Connecticut found itself sliding into a new
recession having never recovered from the last one. No state fared
worse during the post-2009 economic expansion.
Now New Yorkers are fleeing a city hard-hit by Covid-19,
including for Connecticut's pastoral towns, giving one of the
nation's most troubled states a glimmer of hope.
Moves from New York City to Connecticut have more than doubled
from the prior year since the city's shutdown began in March,
according to moving company FlatRate Moving. Home-rental searches
have surged, and private schools say they have been inundated with
applications from New York parents making exit plans. Real-estate
professionals say they are also hearing of increased interest in
commercial office space from New York-based firms.
Local officials cautiously welcome the change in attitude after
the state's suburban focus held it back for so long.
"Those weaknesses now might be our strengths," said Chris
Spaulding, first selectman in Weston, a southern Connecticut town
of about 10,000 known for its top-tier schools and its requirement
that most residential property be at least 2 acres.
"You see these cars with New York plates going 15 miles an hour,
stopping at houses with 'for sale' signs," Mr. Spaulding said.
"Before Covid we were kind of moribund."
Connecticut lost $12 billion in GDP from 2007 to 2019 -- more
than any other U.S. state. This malaise fueled chronic budget
problems even before the pandemic sent state revenue into a free
fall. The state is currently projecting a $2.5 billion budget hole
for the fiscal year that began in July, and about $3 billion in the
next year.
Connecticut shed more than 288,000 jobs in March and April,
after never fully regaining the jobs it lost in the 2007-09
downturn.
No state's real-estate market struggled more to rebuild home
value after the financial crisis. By the end of last year, typical
home values were stuck at about 20% below their pre-crisis peak,
according to estimates from real-estate company Zillow, compared
with a nationwide climb of nearly 15%. Population declines over the
past five years haven't helped.
Those depressed suburbs -- especially in Fairfield County,
across from the New York border -- are now getting a fresh look.
Barbara Rosati left her home on Manhattan's Upper West Side to rent
in Wilton this spring. She said she had been enamored with New York
City's energy, abundance of restaurants and chance encounters on
the subways, but has quickly become a suburban convert.
"I'm out in nature. I'm just doing the complete opposite of what
I thought I loved," Ms. Rosati said. "I'm not going back to the
city."
After renting in Wilton, the 55-year-old signed a contract for a
four-bedroom home on 3 acres in the town of Easton.
Connecticut's suburbs have long had a seesaw relationship with
the nation's largest city, benefiting from New York's problems,
then losing out when the city rebounded.
The last time Connecticut reaped significant rewards was the
mid- to late-20th century, when New York City suffered from a
surging murder rate and fiscal troubles. Connecticut beckoned to
businesses and employees with safe towns, good schools and -- until
the early 1990s -- no personal income tax.
Many major New York companies decamped to Fairfield County in
the late 1960s and 1970s, including industrial conglomerate General
Electric Co., energy firm Conoco Inc., smokeless-tobacco maker U.S.
Tobacco and Chesebrough-Pond's, the maker of Vaseline before a
later acquisition.
Connecticut added 196,700 jobs during the 1980s, a 14% jump,
many in the insurance and finance sectors. In 1986, pharmaceutical
company Bristol-Myers opened a sprawling new research lab in
Wallingford, Conn., that would eventually employ 1,300 people
pursuing treatments for HIV, heart disease and cancer.
The economic winds began shifting in the early 1990s, when a
tough recession hit the state hard.
Political leaders "believed their suburban economic strategy,
which had been very successful in the '70s and '80s, would always
carry the state through," said Joseph J. McGee, who was
commissioner of the state's economic-development agency in the
early 1990s. "And when that strategy changed abruptly because
people wanted to live more in the cities, they were not
prepared."
Connecticut found itself sandwiched between two major
metropolitan areas, but without a big city of its own. To the
northeast, Boston has grown 21% since 1990, buoyed by its position
as a life-science boomtown. General Electric, after more than four
decades in suburban Fairfield, Conn., moved its headquarters to
Boston in 2016.
Two years later, Wallingford lost its largest taxpayer when
Bristol-Myers Squibb Co. shut down its lab, as part of a larger
move that included shifting cancer research to an expensive
neighborhood filled with biotechnology firms in Cambridge,
Mass.
The state's leaders aren't sure if New York transplants are
there to stay or just riding out the storm, but they want to keep
them, said David Lehman, Gov. Ned Lamont's top economic-development
official.
"We are going to market ourselves more to those individuals as
opposed to marketing ourselves to the company," he said, regarding
efforts to lure businesses. Commercial real-estate experts believe
the trend of people steering clear of crowded offices and working
from home could long outlast the pandemic.
If this new craving for suburban living leads to just a 5%
increase to the state's labor force, including people working from
home, that would be a huge boost in tax revenue, Mr. Lehman
said.
The newfound demand for Connecticut's suburbs has potential for
the entire state, but particularly for Fairfield County, which
still puts residents within commuting reach of New York, Mr. Lehman
said. The state isn't giving up trying to revitalize its own
cities, which will remain important in the post-pandemic world, he
said.
The state's poor economic performance after the last recession
will continue to dog Connecticut as it tries to rebound from the
current crisis, said Don Klepper-Smith, chief economist at
consulting firm DataCore Partners.
"Connecticut has dug itself into a hole here," he said. "I think
the state economy is going to underperform for the next several
years."
A long-running challenge for Connecticut is its reputation for
high taxes. The Tax Foundation, a conservative-leaning think tank,
ranks Connecticut 47th on its state business tax climate index.
The tax argument holds less sway for New Yorkers. Connecticut's
top income-tax rate is lower than New York state's, plus New York
City also collects an additional income tax.
New Yorker Stacie Black, 38, said lower property taxes on the
Connecticut side of the border are a draw in her continuing search
for a house there and in New York's Westchester County. She and her
fiancé recently listed their home on Manhattan's Upper East
Side.
"The homes that we can afford in Connecticut are probably
$100,000 more than the homes we can afford in Westchester just
because of the taxes," she said.
Ms. Black, who sells event space in the hospitality industry,
has been weighing Connecticut's relative affordability against
longer commute times. She isn't interested in long, daily trips to
the city, but is more willing if she sticks at least partially to a
work-from-home schedule. "I could manage it for two days a week,"
she said.
Commercial real-estate experts say New York City-based
businesses have been scouting suburban offices, including in
Connecticut, as they contemplate bringing at least some workers
back to cubicles. Citigroup Inc. confirmed it is contemplating
leasing office space in Connecticut, among other areas in the
greater New York region.
Darin Buelow, global location strategy leader at Deloitte
Consulting, said he has heard more broadly of financial firms "that
are looking at space in suburban markets, including Connecticut, or
they're going to." Suburban offices may prove easier to access in a
protracted pandemic than city high-rises reached by congested
trains and elevators, he said.
"I think companies are starting to hedge their bets a bit and
look around," he said.
Before the pandemic hit, Felix Charney and his partners
Crestline Investors Inc. were in the midst of a commercial and
residential redevelopment of the nearly empty former headquarters
of Union Carbide Corp., which fled New York City for the
futuristic-looking Danbury office in the early 1980s.
Bought for $17 million, Mr. Charney and his partners were
betting they could turn around the flagging 1.2 million-square-foot
space, which is about 60 miles north of Manhattan. They now hope
the wind is at their back.
"The perception now is that the suburbs are shinier," said Mr.
Charney, president of Summit Development. "We aren't
complaining."
Connecticut issued more than 1,900 permits for new housing units
this year through May, marking the highest figure in five
years.
In Westport, New Yorkers have driven a surge in applications at
the private Greens Farms Academy, Head of School Bob Whelan said.
The school received 65 applications between mid-March and early
July, up from 29 in the same period last year, along with nearly 70
inquiries.
In neighboring Weston, many homes are tucked far back from the
road behind the low stone walls familiar throughout New England.
Real-estate agent Vickie Kelley recently sold a $1.2 million home,
still under construction, to a family relocating from Brooklyn.
Their need, she said: two home offices.
She also sold 12 homes in a recent nine-day stretch, marking an
unusual flurry for this time of year. Weston, which requires a
drive to a neighboring town to catch the train and doesn't boast of
many walkable amenities, had seen its home values fall particularly
hard.
"I never thought a pandemic would give our market such a push,"
Ms. Kelley said.
Edith and Lev Ratinov, who have two young children, are in the
process of selling their home in a cooperative building in northern
Manhattan, with plans to relocate to Weston. Ms. Ratinov, a
physician assistant, grew up in Connecticut, and Mr. Ratinov, who
co-founded a technology startup, is a native of Kyrgyzstan who has
steadily warmed to the idea of suburban life.
They were already thinking about a move, lured by Connecticut's
schools, but the pandemic sped up their plans.
"Winter is coming. What are you going to do when your kids don't
go to school and the playgrounds are closed?" said Mr. Ratinov,
contemplating another school year during an unresolved
pandemic.
Ms. Ratinov realized that she didn't mind hunkering down at home
with her husband and children, ages 6 and 4, when she wasn't at
work.
"I was like: oh, I'm not seeing anybody, I'm just with my family
and I'm happy," she said. "That's what did it for me."
Write to Joseph De Avila at joseph.deavila@wsj.com and Jon Kamp
at jon.kamp@wsj.com
(END) Dow Jones Newswires
July 12, 2020 09:18 ET (13:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.