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8 HARTFORDBUSINESS.COM | APRIL 17, 2023 DEAL WATCH The company that builds and installs the critical systems in virtually every type of facility is the same company you can rely on to maintain them. For over 50 years, our clients have trusted us to provide sustainable, more effi cient, greener facilities. Experts in: Design/Build, Pre-Construction Service LEED Capabilities SINGLE SOURCE DESIGN/BUILD EFFICIENT. QUALITY. COST-EFFECIVE. 860.871.1111 Toll Free: 800.741.6367 nemsi.com MECHANICAL | ELECTRICAL | PLUMBING | SHEET METAL | BUILDING AUTOMATION | FACILITIES SERVICES License #'s: E1-197483 S1-406020 P1-290301 SM1-975 MC-1134 Developer Greg Vaca in February revamped plans for a mixed-use project called the Windsor Center Plaza along Broad Street in Windsor. HBJ FILE PHOTO is the number of single renters and couples looking for smaller, more manageable apartments, they said. John Lockhart, president of South Dakota development firm Catalina Buffalo Holdings Co., is preparing to build a 194-unit apart- ment complex in New Haven's Hill neighborhood, with 73 studios, 87 one-bedroom units, 26 two-bedrooms and eight, three-bedrooms, primarily market rate. The developer has not scaled back its plans for two- and three-bedroom apartments, but Lockhart said he understands why it's an attractive option. Aside from the higher demand for smaller units, there are financial factors at play. Monthly rents per square foot are typically higher for studios and one-bedrooms over larger apartments, Lockhart said. Smaller apartments are generally easier to manage, and any needed touch ups or repairs can happen more quickly. Additionally, smaller apartments typically have higher tenant turnover, but also greater demand, which allows lower downtime between renters, Lockhart said. "This allows landlords to re-lease space out more nimbly at higher market rates if the market is going up, as it has been," he said. The greatest advantage of building smaller apartments "is that they really lend themselves to coasting on a market upswing trend on their lease trade outs." Developers also see some cost advantages to building studios and one-bedrooms, such as buying smaller appliances and less cabin- etry, flooring and bathroom materials, Lockhart said. Another active developer of one-bedroom apartments is New York-based Vessel Technologies, which has residential proposals in Simsbury, Cheshire, Rocky Hill and Glastonbury, with one project under construction in New London. Those developments were pitched with only one-bedroom units geared toward "young people that might not be ready for homeownership, or seniors who want the option to down- size while remaining in a community they've sometimes called home for decades," said Vessel Founder and CEO Neil Rubler. Vessel uses a fairly uniform archi- tectural and engineering design for most of its buildings, saving time and costs when proposing a new project, Rubler said. The company has also designed flexibility into its system to account for changes in demand over time. Every apartment could be combined with an adjacent unit fairly easily, to allow for more family-sized dwellings if demands change, Rubler said. Meeting market demand While the market is leaning toward smaller apartments in more dense or downtown areas, most developers still see a need for larger units. Rubler said "the market in recent years has been strong across unit types, and we expect that rising interest rates will put additional upward pressure on family-sized apartments as homeownership becomes more costly." Lockhart said he believes there will always be demand for two- and some- times three-bedroom apartments, but building them comes with some risks. Lately, newly constructed three-bedroom apartments "have been the slowest to get filled on lease up and spend the most downtime between trade outs," he said. Pricing is the big issue, Lockhart added. A family that can afford a new three-bedroom apartment with an average rent of $3,000 per month can likely buy a starter home and pay a mortgage within most of Connecticut, outside Fairfield County. Simultaneously, families that can't afford to — or, in some cases, don't wish to — purchase a home often seek out less dense townhouse-type properties for something more akin to a single-family home experience. "So all in all, you wind up with a much-reduced prospective tenant pool for new construction of three-bedroom units," Lockhart said. "The higher the rent you are seeking, the more likely that your prospective tenant can also afford to purchase a home."