Hartford Business Journal

14 Hartford Business Journal • October 12, 2015 www.HartfordBusiness.com Taking Social Responsibility to Heart FORUM OCTOBER 22nd, 2015 Time: 7:30 a.m. – 11:30 a.m. Location: The Mark Twain House, Hartford, CT Keynote Speaker: Floyd Green, Corporate Vice President of Community Relations & Urban Marketing, Aetna Ticket Price: $45.00/person Register today and choose your workshops! • Supporting the community through a company donor-advised fund • The Good Business of Cause Work • ROI of Community Engagement • Impact Investing: What it's all about and how it's making a difference • Community Challenges/Community Solutions • Focusing corporate giving to align with business goals To see workshop descriptions and speakers or to register for the event, visit HartfordBusiness.com/OurEvents or contact Amy Orsini at aorsini@Hartfordbusiness.com or 860-236-9998 ext. 134 P lease join the Hartford Business Journal at our second annual Business Gives Back Forum which will provide important information on the many ways that businesses of all sizes can become more involved in their communities. Event Partners: Presented By: Presenting Sponsors: Event Sponsors: from page 1 board, most conver- sion landlords are smiling. But some also voice an under- current of concern about whether enough is being done to promote the exis- tence of new down- town housing. "I was surprised at the pace,'' said Rob- ert Arista, co-founder and president of Dakota Partners, the Massachusetts devel- oper who bought and, with CRDA co-fund- ing, renovated 179 Allyn and is convert- ing a second building in the shadow of the State Capitol into apartments. "I wasn't surprised it filled up.'' Occupancy percentages as of Sept. 15, for the other three completed conversions, according to CRDA include: 26-unit Grand on Ann (201 Ann Uccello St.), 77 percent; 286-unit 777 Main St., 65 percent; and 190- unit Spectra Boutique Apartments (5 Con- stitution Plaza), 44 percent. "There's something going on,'' Freimuth told the Oct. 1 audience at the 25th annual Connecticut Commercial Real Estate Confer- ence at the Marriott Hotel Downtown, where he aired CRDA's conversion-occupancy report. Later, Freimuth offered a more probing explanation as to what has happened to validate what he, some developers and bro- kers say was an intentionally conservative estimate of the ability of downtown's fresh apartment inventory to appeal to mostly college-educated Millennials and middle- aged residents eager for a lifestyle change. "My general feeling throughout the first year of our effort was that the industry was looking at the rearview mirror rather than the front windshield,'' he said. "We weren't talking about a whole lot of units and we played many different sub markets by price, location, ame- nity package, rehab vs. new, and unit sizes. The absorption rate this year has been a very pleasant surprise to a lot of people." Absorption of the remaining unclaimed converted apartments is running about 40 per month, he said. That's four times the lethar- gic 10 to 12 units per month absorption rate that Freimuth said real estate and financing experts had projected to CRDA and potential developers a few years back, he said. "We were more optimistic than the appraisers, local bankers and a variety of naysayers; but we still built conservative pro formas,'' Freimuth said. "The 3 percent [Greater Hartford apartments] vacancy rate, consistent annual increases in rental rates, and the national demographic and economic trends for urban areas, did play out as we had hoped. The demand was there, but the supply wasn't. Therefore the market performance was not being fully understood by many." Brooklyn, N.Y., developer Yisroel Rabi- nowitz was first to market in late 2014 with The Grand on Ann apartments. Rabinowitz is mixed about whether the occupancy paints a positive picture or harbors concerns as to the market's demand for downtown apartments. "What's happening in my building isn't necessarily what others are seeing in theirs," he said. Rabinowitz said his apartments' rents are at the upper end of the scale compared to most of the other conversions, reflecting the units' sizes and amenities, among other factors. Rents for Grand apartments range from $1,425 for small- er units to $2,000 for penthouse-level suites. The Grand's tenants, he said, are a blend of newcomers to Hartford, working in insurance and the city's two hospitals, as well as existing downtown dwellers looking to upgrade to newer space. "If we had been priced a lot lower than where we are here,'' Rabinowitz said, "we would have been 100 percent [full] a long time ago.'' Rabinowitz agrees with Freimuth that the naysayers have been silenced for now. However, he says he wishes CRDA would do more to promote the story of downtown's nascent apartment revival. "There should have been more of an effort from CRDA and developers to get our units rented,'' he said. CRDA's Freimuth said he agrees "there is a need to expand and grow the PR cam- paign. But the best advertisement is the ongoing success the projects are having." Meantime, the higher-than-anticipated absorption is good news for at least three other apartment conversions and new con- struction underway downtown: The nearly completed buildout of the 121-unit Front Street Lofts, next door to what will be the site of UConn's new downtown campus on Prospect Street, plus office-retail space conversions at 36 Lewis St. and 40 Elm St. that are due to come on line in early 2016. In the city's Frog Hollow neighborhood, Dakota Partners has just begun work, also with CRDA financial backing, to convert into 112 apartments the former Pratt & Whitney factory and later the home to for- mer Hartford Office Supply, at the corner of Capitol Avenue and Flower Street. Dakota Partners' Arista acknowledged the rapid fill-up of his and other office-to-apart- ment conversions could indicate landlords have priced their product too low. "It has occurred to me, yes,'' he said, quick- ly noting he's convinced that the demand indi- cates the apartments are priced to suit the market. At 179 Allyn, rents were pegged to be attractive to the single- and two-person households that its market research identi- fied as the target market, Arista said. Hartford region commercial broker Tom York said the robustness of the downtown apartment market strengthens the desire in some corners for more of an 18-hour city, where residents live, work and play. "Will it translate,'' said York, of Goman+York Property Advisors in East Hartford, "into a material increase in office rents in the near term? n Hartford in demand Downtown's Apartment Fillup The Capital Region Development Authority, a promoter and co-funder of downtown Hartford's office-to-apartment con- versions, released a mid-September occupancy survey for the first four completed developments. Total Occupancy Property units rate 179 Allyn St. 63 100% The Grand on Ann, 201 Ann Uccello St. 26 77% 777 Main St. 286 65% The Spectra Boutique Apartments, 5 Constitution Plaza 190 44% S O U R C E : C R D A

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