NORTHEAST SNAPSHOT, AUGUST 2005
Hartford, Connecticut Multifamily Market
Because of limited new multi-housing supply in greater Hartford over the last 15 years, the region has recently been positively stigmatized with a reputation for fundamental stability. This has caught the attention of many regional and national developers chasing fundamentally sound, low risk investment and development opportunities. They identify greater Hartford as one of the few markets in the nation that has not been oversaturated with new supply in recent years. In fact, even considering all of the new developments currently proposed for the area, greater Hartford would still have one of the oldest inventories of multi-housing stock in the northeast. And there is a lot of new development.
Michael L. Stone
CB Richard Ellis
Northeast Multi-Housing Team
Hartford 21 is currently under construction at the site of the former Civic Center Mall in downtown Hartford and will be the tallest residential apartment building in New England with 36 stories and 262 units. It is scheduled for completion by the end of 2006. Homes for America Holdings, owner of the Colt Gateway complex (formerly the Colt gun factory), is converting a collection of blighted mills into 300 loft-style units. Trumbull on the Park is nearing completion of 100 units on Bushnell Park, and the 55 on the Park project has successfully leased up 135 units on Bushnell Park. Construction is underway on the former Sage Allen Department Store to convert it to 120 residential units.
Another 200 units are proposed for Adriaen’s Landing, a $700 million mixed-use development comprising a convention center that offers some of the largest ballrooms on the east coast, a two-phased 800-room Marriott hotel, and numerous retail and entertainment venues. The convention center was recently completed and is generating bookings ahead of schedule, and Phase I (400 rooms) of the high-rise Marriott is set to open this summer. Numerous other residential developments in Hartford are proposed or underway.
In total, over $2 billion in residential development has or will find its way to downtown Hartford in just a 5-year period. This activity will effectively double the downtown housing inventory. Given a population of just 122,000 in the entire city of Hartford and virtually no new multifamily supply in the city in the prior 15 years, Hartford is poised for dramatic changes that will improve opportunity and enhance the lifestyle of the entire region.
The majority of the development is in downtown Hartford primarily due to financial incentives and subsidies from city and state agencies to stimulate the downtown housing market. Hartford has traditionally exhibited modest housing prices considering the significant wealth in the region. As a result, new mid or high-rise construction is not cost feasible without financial incentives. Given recent increases in demand for downtown housing and associated increases in rental rates, adaptive reuse of existing structures has become cost-feasible, especially as it applies to condominium form of ownership.
A number of developers that are new to the area are active in Hartford. David Nyberg of College Street LLC, based in New Haven, completed the first new downtown project. He converted an empty high-rise office building facing Bushnell Park to a 135-unit rental complex. The property reached stabilized occupancy at a pace consistent with suburban absorption statistics, which was a good sign for downtown Hartford’s demand potential. Since then, developers such as Northland Investment Corporation, based in Boston; Tarragon Realty, based in New York City; and numerous local developers have invested in Hartford’s renaissance. Other developers such as Homes for America Holdings, which is converting the former Colt gun factory to housing and commercial space, and the Waterford Hotel Group, who is spearheading the Adriaen’s Landing project, have long since recognized the potential of the region and are mid-way through sizable development projects.
Fortunately, the developments underway and proposed have been designed with the existing complexes in mind. When completed, a diverse selection of for sale and for rent housing will be available. For example, prospective renters will be able to choose from spacious, loft-style units at Colt Gateway that will cater to a more casual and artistic clientele, or choose the more luxurious units planned at Hartford 21 that will consist of well-appointed apartments in a modern, 36-story high-rise adjacent to the Civic Center Coliseum. As a result of the diverse nature of development, a diverse cross-section of tenants and unit owners ranging from recent college graduates to empty nesters have already expressed interest in living in downtown Hartford.
Downtown rents range from about $700 to $1,200 for one-bedroom units and $900 to $2,000 for two-bedroom units. Rates per square foot range from approximately $1.25 to $2.25 per month.
With low interest rates promoting home-ownership opportunities, it stands to reason that apartment occupancy would have decreased. In most major markets, occupancy and rental rates decreased dramatically due to home ownership opportunities. While landlords of high-end rental housing in greater Hartford also lost tenancy to home ownership, they had an easier time replacing the tenants given the limited choices for those seeking luxury rental opportunities. As a result, the apartment market has remained generally stable at around 95 percent occupancy throughout the low interest rate environment.
Downtown Hartford is the area to watch for the most activity in the near future. The city center is rapidly morphing from a commuter CBD whereby most downtown employees would go home to the suburbs at the end of the workday, to a downtown with “feet on the street” into the night. With over 1,000 new units recently completed or proposed for downtown, Hartford is poised to regain its stature that it earned in the 1950’s as a dynamic city center to live and work.
While much of the growth has been stimulated through incentives to fill financial gaps, it has stimulated a downtown housing revival that has excellent initial momentum. As the downtown marketplace grows more popular, and retail support services follow, new developers will more readily identify this market as one with limited risk and considerable potential.
— Michael L. Stone, vice president CB Richard Ellis|Northeast Multi-Housing Team
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