NORTHEAST SNAPSHOT, FEBRUARY 2005
Fairfield County and New Haven County,
Connecticut Multifamily Market
The multifamily market in Fairfield and New Haven counties
in Connecticut has been growing steadily since 2000, and the
market has appreciated significantly in the past few years.
Paul Leonard, partner at New England Multifamily LLC in the
city of Fairfield, believes that the market will continue
to perform well in 2005.
The Fairfield County and New Haven County markets are
expected to continue to appreciate, but at a slower pace than
from 2000 to 2004, says Leonard. Relatively high rental
rates in major markets such as Stamford, Fairfield and Bridgeport,
and scarce developable land have slowed development activity.
According to Leonard, New construction is being limited
to reusing existing sites. The market is 95 percent developed,
if not more.
The redevelopment of former industrial buildings into loft
apartments or condos has become a popular means to an end
for multifamily developers in the area. Leonard notes that
municipalities are willing to work with developers to accelerate
the renovation of these properties producing little or no
taxes and get them back on the tax rolls. In Bridgeport, the
former R.L. Scinto industrial building on Federal Street has
been redeveloped into 70 condominium units.
Aside from the adaptive reuse of industrial buildings, renovating
or adding units onto existing multifamily structures has emerged
as a viable way to create additional residences in the Norwalk-Stamford
market. Examples include two redevelopment sites on Main Street
and one on Isaac Street in Norwalk, which added an additional
100 units to the market.
Typical rental rates in Fairfield County (including all municipalities)
range from $1,150 for one- and two-bedroom spaces to $1,600
for four-bedroom units. Rental rates can vary considerably
among municipalities with towns such as Greenwich and New
Canaan achieving rental rates of more than $3,000 per month.
Rental rates have remained static for the past year,
says Leonard. Vacancy rates remain low and have consistently
held steady between 5 percent and 7 percent for properties
with no functional or economical obsolescence.
One submarket that has the potential for greater multifamily
growth in 2005 is an area known as the Valley, a corridor
along Route 8 that stretches from Shelton to Beacon Falls.
On the investment side, Leonard has noticed a shift in focus.
Investors are becoming more concerned with the forecasted
cash flows a property can achieve as opposed to relying so
heavily on making money on the resale of the property a few
years later, he says. Interest rates have become
more paramount in projecting rates of return on multifamily
investments. However, if investors look at multifamily investing
as part of their long-range investment strategy, they should
continue to do well and outpace many alternative, non-tangible
Fairfield and New Haven counties have strong employment bases
with forecasted increases in population into the foreseeable
future. As such, demand for rental housing should continue
to be strong, spur further real estate development and allow
for continued increases in property values.
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