Hartford Business Journal

www.HartfordBusiness.com • July 9, 2018 • Hartford Business Journal 13 II; Goodwin Square and its adjoining hotel; Metro Center; and Trumbull Place, 242 Trumbull St., directly opposite Northland's Hartford 21 apartment high-rise — built from the ground up in 2006 for $200 million — and the adjoining XL Center arena. He said he was originally attracted to Hartford because the state's and city's economies were flat at the time, while the national economy was booming. Commercial real estate was overpriced in much of the United States, but not here, he said. "I looked at Hartford. It was pretty much economically flat on its back," he said, referring to the mid-to-late '90s. "Prices were unbelievably cheap. And we thought it provided a good contrarian opportunity. Our roots are as a contrarian investor." He also had a personal connection here. He is a Connecticut native whose grandfather was a Hartford mailman after he got out of World War I. His father was a trainee at G. Fox. But most of all, Gottesdiener says he saw opportunity in the residential movement brewing downtown. Things started out well for Got- tesdiener in Hartford and he became one of the city's top cheerleaders. In fact, a 2007 New York Times article called him "Hartford's Booster in Chief." He espoused the notion of turning the city into a "24-hour neighborhood" where people "live, work and play." He even expressed a desire to buy and bring back to Hartford an NHL franchise and lead development of a new downtown arena. Northland also managed the XL — formerly the Civic Center — for a number of years. Post-recession blues Following the Great Recession, which ravaged the state's and city's economies, things soured for Northland in Hartford. It lost three downtown office buildings to foreclosure — limiting its appetite for future investment here — and shifted its focus and investment capital to high- growth markets, like Boston, Austin, Texas and Florida. Northland also is cur- rently planning a major redevelopment in its Newton, Mass., home base. Gottesdiener insists he didn't over- pay for his Hartford office buildings, but he may have overleveraged, financ- ing 75 percent of each of those proper- ties with debt. In most markets, that would be prudent, he said, but Hartford office rents have not risen in more than two decades, while expenses, including property taxes, have steadily crept up. The recession wreaked havoc on city property values and Northland's fore- closed properties all had sizable mort- gages reaching maturity. Those loans were also securitized, making it difficult to renegotiate terms. Northland lost all three properties — CityPlace II, Good- win Square and Metro Center — during a two-year stretch in 2011 and 2012. Gottesdiener said his failed Hart- ford office investments, which he says have been Northland's only foreclo- sures in its 27-year history, convinced him to return to his multifamily roots, buying and building housing properties across the United States. He says they have invested $3.5 billion over the last decade and have holdings in 10 states. But today, Gottesdiener says he's refocused on Hartford. Contrary to critics who claim he dislikes the city and keeps retail rents high to keep those spaces vacant, he says he hopes to develop more here. It's a chief rea- son, he says, that none of his Hartford holdings are for sale. "I love Hartford, so we're happy to be here. But we're very cautious,'' he said. With the state-led, $550 million financial bailout of the city, the addition of new housing units, UConn's down- town presence, plus rail and other tran- sit options, Hartford is poised, he said, for an economic and cultural rebound. He also sees promise from the success of Dunkin' Donuts Park at the front door of the proposed Downtown North housing, office and retail development. He says his retail storefronts at XL Center, 242 Trumbull, and the north side of Pratt Street are empty, not due to high rents, but "because there is no demand for retail," other than bank branches. He said Northland has invested more than $10 million in cash and in-kind services to attract and prop up retail tenants over the years, including local fashion retailer Morneault's Stackpole Moore Tryon and Hartford Prints. He rattled off other tenants, mainly restaurants, that opened but didn't last in various Northland-owned retail spaces — Wireless Zone, Rio Grill, Capital Inc., Tanuki Goten, investment adviser Smith Whiley & Co. and the short-lived Market at Hartford 21 gro- cery store. He also said that, in 2009, Northland obtained a lease proposal from office-supply chain Staples to oc- cupy 3,526 square feet at Hartford 21, but that deal fizzled. Lessons learned Gottesdiener says he learned some valuable business and public relations lessons from his Hartford experi- ences, ones he vows not to repeat. Hartford 21: The tower Northland got right By Gregory Seay gseay@HartfordBusiness.com Larry Gottesdiener recalls the day years ago when he showcased his soaring 36-story Hartford 21 luxury apartment tower to local developers. He remembers how one of down- town Hartford's best-known local landlords at the time could barely contain his incredulity, gazing around the lavishly appointed third- floor amenity spaces, including the soaring, glass-enclosed great room. "This room cost you a million dollars!" Gottesdiener recalls his landlord-competitor saying. Opened in 2006 with 262 luxury apartments, penthouses and com- munity and ground-floor retail spaces, totaling 890,000 square feet, Hartford 21 is downtown's fourth tallest skyscraper (411 feet) and, when built, was the city's first new one in decades. It landed Hartford in the record books at the time as home to the tallest apartment building between Boston and New York City. Of all his remaining Hartford realty holdings, Gottesdiener says he's proudest of Hartford 21, at 221 Trumbull St. It is, he says, a crown- ing achievement not just for his property investment-development firm, Northland Investment Corp., and his decision to plant his flag in Hartford, but for the city, too. "This building would be the nicest apartment building in any major city in the country,'' he said. "We added a beautiful building to the skyline. It won architectural awards. We had one of the pre- eminent firms in the country design it, CPT out of Boston. It's sort of a nice legacy for my grandfather, the mailman." Gottesdiener admits he went a bit overboard with its design and materials, including the 36-story glass-curtain wall on the southeast and northwest corners of the build- ing, steel construction, an intimate eight-units per floor, textile covered hallways and expensive metal clad- ding fronting the XL Center. But it was worth it, he says. Northland invested $65 million One of the major pride points of Hartford 21 is the apartment high-rise's soaring and well-furnished lobby that greets residents and guests as they enter. Continued on next page >> Continued on next page >> PHOTO | CONTRIBUTED BY THE NUMBERS Northland Investment Corp. $5B Total amount Northland has invested nationwide in commercial real estate. 25,500 Total number of apartment units owned by Northland nationwide. $3.5B Total amount of development Northland currently has in process, mainly in Boston and Newton, Mass. Hartford Mayor Luke Bronin

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