Hartford Business Journal

16 HARTFORDBUSINESS.COM | July 4, 2022 A Tale of Two Apartment Markets Red-hot Hartford, New Haven multifamily sectors evolve along different paths By Michael Puffer mpuffer@hartfordbusiness.com R MS Cos. is welcoming the first tenants to its sleek, gray-sided, nearly-finished apartment building that wraps around Trumbull and Main streets on the northern edge of downtown Hartford. The 270-unit building next to Dunkin' Donuts Park is among the first installments of Stamford-based RMS' "North Crossing" development. RMS President Randy Salvatore said the plan is to eventually add about 1,000 new apartments around the stadium, largely by building on parking and other empty lots. About 40 miles south, in New Haven, RMS is nearing completion of "Pierpont at City Crossing," a 223- unit building also erected on a vacant parking lot. The fact that Salvatore is developing apartments in both markets isn't wholly unique. Several developers are building new rental units in Hartford and New Haven — cities seen as critical to Connecticut's economic future, both in attracting new talent and companies to the state. In some ways, Hartford's and New Haven's multifamily markets reflect the health of their respective economies. And they are evolving in similar and dissimilar ways. RMS' developments in both cities focus on small units in buildings packed with premium amenities including pools, fitness rooms, lounges and more. They differ in financing and rents. The Capital Region Development Authority (CRDA) provided an $11.8 million low-interest loan for RMS' $56.2 million project in Hartford. Being a CRDA-backed project also effectively cuts a Hartford apartment development's tax burden in half for its usable life, a major advantage. Salvatore said his New Haven project benefited from a five-year tax abatement, but otherwise received no public backing. Developers and economic development officials said New Haven's efforts to improve downtown livability are more advanced than Hartford's, and that its economic engines have also more successfully linked to apartment demand. Most see Hartford as an increasingly good bet with the potential to nearly match New Haven as an apartment destination. For now, however, Hartford rents don't justify the costs of putting up new apartment buildings without public assistance. Salvatore said he can charge $2,200 to $2,300 monthly for a one- bedroom apartment in New Haven, and about $1,800 to $1,900 per month in Hartford. "It can be a 15- to 20-percent difference," Salvatore said. "New Haven does not need outside public financing. … In Hartford, the rents are not at that point right now where you don't need some of that public support." Even so, Salvatore believes the national trend toward city living and Hartford's efforts to grow dining, arts and entertainment options will continue to strengthen the Capital City's appeal — even as it struggles with higher office vacancies and fewer workers downtown due to the pandemic's influence. Salvatore said he's had an overwhelming response from prospective renters at his new Hartford property, validating his plan to continue building. He hopes to break ground this summer on the next phase of North Crossing — a $60-million development including a 530-space parking garage and 237-unit building on a single lot. Salvatore is also moving to convert the top floors of the downtown Hilton Hotel into 142 apartments. "I wouldn't be making these kinds of investments — taking these kinds of risks — if I didn't believe in the future of both of these cities," Salvatore said. "I'm very bullish on both New Haven and Hartford. That's why I continue to build and continue to own significant real estate in both." Apartments beget apartments In Hartford, new apartment developments are seen as an economic development tool for a city that has long relied on big corporations and thousands of office workers to fuel its shops, restaurants and real estate market — a dynamic put at risk by the pandemic, which has made remote work more the norm. Since its formation in 2012, the CRDA has spent $156 million backing downtown apartment builders, leveraging another $500 million in private investment, according to Michael Freimuth, executive director of the quasi- public development agency. That has brought more than 2,200 new apartments to downtown Hartford, with 500 more currently under Developer Randy Salvatore, CEO of RMS Cos., stands on the roof of his nearly-completed, 270-unit apartment building on the northern edge of downtown Hartford. HBJ PHOTO | MICHAEL PUFFER MONTHLY APARTMENT RENTS COMPARISON Hartford $2.25 to $2.75 per sq. ft. New Haven $3 per sq. ft. Stamford $3 to $4 per sq. ft. Source: Capital Region Development Authority

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