Hartford Business Journal

20 HARTFORDBUSINESS.COM | DECEMBER 19, 2022 5 WE WATCHED Developer Randy Salvatore in front of The Pennant's courtyard, when it was under construction earlier this year. HBJ PHOTO | MICHAEL PUFFER Despite supply chain, other issues, Salvatore remains bullish on Hartford as North Crossing development's first phase debuts By Michael Puffer mpuffer@hartfordbusiness.com D eveloper Randy Salvatore's ongoing effort to build around 1,000 apartments just north of Hartford's downtown was buffeted in 2022 by labor shortages, supply chain difficulties and interest rate hikes. A court challenge has stopped him from breaking ground on the next phase of development. Still, Salvatore said, demand for the 270-unit apartment building he has nearly finished next to Dunkin' Donuts Park has been stronger than antici- pated, and the red-hot rental market has led to higher rents than budgeted. Combined, these factors make him more upbeat than ever on the Capital City's prospects, he said. "The fact that we rented 190 to 200 apartments in the first five, six months at rates exceeding what we thought about tells me that if you build it, they will come," Salvatore said. "If you build a great product they will come. I was bullish before. Now we have actual experience telling us that demand has outpaced what I thought it would be, so I'm more bullish now than I ever was about Hartford." Salvatore started 2022 as one of the great hopes for Hartford. Mayor Luke Bronin and other city officials are counting on the addition of thousands of market-rate apartments to pump new life into a city center that has seen its corporate pres- ence sapped by the pandemic and resulting exodus of office workers to remote or hybrid work schedules. The first phase of Salvatore's broader North Crossing development around the ballpark was initially expected to debut before the first pitch of the Yard Goats' 2022 spring season. Instead, supply chain holdups and labor shortages delayed the opening of the first 270-unit apartment building — dubbed "The Pennant" — until August. In a mid-November interview, Salvatore said he expected to put finishing touches on the last of those initial apartments by the close of the year. As The Pennant was readying for occupancy this summer, Salvatore anticipated rolling right into the next phase of construction — a 522-space parking facility attached to a structure with 528 apartments — on a lot just southwest of the stadium. That hope was put on hold by a twist in a lawsuit filed by Middle- town-based Centerplan Cos., the original developer of Dunkin' Donuts Park and surrounding development. Centerplan was fired in 2016 by the city of Hartford after being accused of doing shoddy work that was late and over budget. The city subsequently hired Salva- tore to build apartments on vacant lots around the ballpark. Centerplan's suit — which contends it was unjustly fired and still has rights to build on the lots — gained new life in May, when the Connecticut Supreme Court ordered a new trial. Centerplan has sought an injunction against additional construction, at least temporarily delaying further progress on the North Crossing development. Pent-up demand But 2022 hasn't been all challenges. Salvatore said the hot rental market has boosted demand — and rents — for units well beyond his expectations. "That's countered a lot of the construction costs and the capital markets, at least to date," Salvatore said. "We are excited about the product we built there and excited about moving into the next phase. But it is to-be-determined when that transpires." In a Nov. 15 interview, Salvatore said he had already leased some- where between 190 and 200 apart- ments. Interior work in some of the units was still ongoing. Some need paint, cabinets or other fixtures — all resulting from supply chain problems. Despite the challenges, Salvatore said he is still eager to continue North Crossing. Even if an expected recession cools demand, he expects it will also ease supply chain issues, labor shortages and even convince the Federal Reserve to lower interest rates. Salvatore said his experience in Hart- ford has taught him there is pent-up demand for high-quality housing. Salvatore said he is playing the long game, balancing temporary costs and benefits against demand for apartments he describes as "a long-term hold." Salvatore this year also continued to advance his plans to partner in a rescue of downtown Hartford's faltering Hilton Hotel. Salvatore plans to transform the 12th through 22nd floors of the hotel into 147 apart- ments. The Waterford Group, owners of the building, would sell half to Salvatore and then redevelop the first 11 floors into 166 hotel rooms under the DoubleTree brand. The Capital Region Development Authority and state Bond Commission have signed off on $11 million in low-interest loans for the apartment conversion project, which Salvatore estimates will cost up to $18 million. Salvatore, in November, said the hotel conversion was just warming up, with liquidators removing old furniture. He expected to begin work before the start of 2023. He aims to have the first apartments ready for occupancy sometime in summer. The hotel will keep some rooms open as it renovates others, Salvatore said. "I think the new model will work," he added. RANDY SALVATORE CEO & President RMS Cos. Education: Bachelor's degree in economics, University of Pennsylvania's Wharton School of Business Age: 53

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