Hartford Business Journal

www.HartfordBusiness.com August 29, 2016 • Hartford Business Journal 3 Hartford's robust apartment market paces healthy CT rental housing By Gregory Seay gseay@HartfordBusiness.com C onnecticut's apartment market, its strongest since the late 1980s, contin- ues to experience tight vacancy despite new construction/conversions that are slow- ing the pace at which landlords can lift rents. New Haven commercial broker Marcus & Millichap Real Estate Investment Services noted those trends in its second-quarter multi- family market report for New Haven and Fair- field counties, where vacancies hover around 4 percent and rents average above $1,300 per month in New Haven County and above $2,500 in the Stamford-Norwalk metro area. For Hartford County as of June 30, M&M pegged the apartment-vacancy rate at 3.5 per- cent. However, the average effective rent in this market is $1,205 per month, up 1.3 percent in the first half of this year. In 2015, the average rent rose 1.6 percent to $1,165. The year before, average monthly rents rose 3.5 percent, to $1,147, according to the M&M market summary. "We've been dealing with some difficult optics in Connecticut — the budget, GE mov- ing its headquarters [to Boston],'' said Victor Nolletti, senior vice president and executive director of M&M's Institutional Property Advisors unit that serves major realty clients. Those optics, however, don't reflect the reality that GE Capital is keeping the bulk of its workforce in the Stamford-Norwalk area, and actually expanding in Danbury, Nolletti said. "New [apartment] units are built and being absorbed by a solid, broad base of empty-nest- ers and professionals, and we continue to see overall positive rent trends,'' he said. Even as rents rise, Nolletti said, Connecti- cut remains a viable option for people who work in New York City yet cannot afford the steep rents necessary to live there. Stamford, Fairfield County's most popu- lous city, has become a haven for renters priced out of the Big Apple's housing market, Nolletti said. Commuters into New York have made Stamford's Metro-North rail station one of the busiest outside of Grand Central Termi- nal, he said. New apartments in Stamford typically fill at the rate of 20 to 30 per month, he said. On Aug. 10, UConn announced approval of plans to erect, starting this fall, 116 Stam- ford apartment units to house up 350 pupils. New Haven, too, has swelled with new apart- ments, with about 500 units either leasing up or under construction, Nolletti said. There are approximately 2,400 units in Fairfield County and another estimated 2,000 units in Hartford, Middlesex and New Haven counties currently under construc- tion, he said. Near term, Nolletti said, the new sup- ply coming on line is likely to dampen net effective rent growth for newer apartment deliveries. "As long as renting is a preferred option over ownership and we maintain a mobile demographic, I don't see any significant risk to the current trend,'' Nolletti said. In Hartford County, effective rents rose in June from a year ago to $1,205 per month vs. $1,095 in 2012, data shows. However, Hart- ford's apartment vacancy rate has fallen to 3.5 percent in the second quarter vs. 4.1 per- cent in 2012. "The rent (average) itself sounds low,'' said landlord Yisroel Rabinowitz, who owns The Grand on Ann apartments in downtown Hartford, 201 Ann Uccello St. "But I guess it encompasses all the older properties, which brings down the average.'' Rents for The Grand's 26 units run from $1,400 to $1,800 monthly, Rabinowitz said. M&M calculates that there are about 2,900 units of new apartment construction under- way or planned for the Hartford market. Those include Dakota Partners' 112-unit conversion of the former Hartford Office Sup- ply Building on Capitol Avenue, in the city's mid-town, and New Jersey apartment devel- oper Continental Properties' construction Continued 860.871.1111 Toll Free: 800.741.6367 nemsi.com License #'s: E1-104939 • S1-302974 • P1-203519 • F1-10498 • SM1-192 • MC-1134 MECHANICAL • ELECTRICAL • PLUMBING • SHEET METAL • BUILDING AUTOMATION • FACILITIES SERVICES SERVICE SOLUTIONS…ONE SOURCE 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 50 years, our clients have trusted us to deliver end-to-end facilities solutions, so they can focus on their core business. We are experts in: Facilities Services Preventive Maintenance Programs Onsite Operations & Maintenance 196 6-2016 196 6-2016 Hartford Apartment Market Summary Average Vacancy Effective Y-O-Y % Rate Rent Change 2007 5.0% $1,060 — 2008 6.1% $1,030 -2.8% 2009 6.6% $1,008 -2.1% 2010 4.8% $1,023 1.5% 2011 3.3% $1,109 8.4% 2012 4.1% $1,095 -1.3% 2013 4.5% $1,108 1.2% 2014 3.3% $1,147 3.5% 2015 3.5% $1,165 1.6% 2016* 3.5% $1,205 1.3% * AS OF 2Q 2016 S O U R C E S : M A R C U S & M I L L I C H A P R E S E A R C H S E R V I C E S , M P F R E S E A R C H The conversion to 112 apartments continues on the former Hartford Office Supply building on Capitol Avenue in mid-town Hartford. P H O T O | C O N T R I B U T E D

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