New York City-based Urban Green Builders is converting the historic Citytrust Bank property on Bridgeport’s Main Street into 118 market-rate apartments and 30,000 square feet of commercial space. The above photo highlights some of the historic detail on the building.
New projects in New Haven like the Yale-New Haven Hospital’s $340 million Cancer Center and other positive economic growth in the city has prompted improvements in the apartment market, while developers, encouraged by Bridgeport’s fundamentals, are investing in that city.
Meanwhile, apartment markets in other parts of the state – especially the Waterbury area – are also doing well after some years of slow appreciation.
“Downtown New Haven’s market is one of the strongest rental markets in Connecticut,” said Steve Witten of Marcus & Millichap Investment Real Estate Services in New Haven.
The city’s mix of the education, health care and biotechnology industries remains secure, even when the economy experiences a downturn – a characteristic that helps support a healthy apartment market, according to a report by Witten.
In addition to the stability of the city’s core industries, the leisure and hospitality sector is expanding, and manufacturing has strengthened in the region. The new Cancer Center, which the Office of Health Care Access has approved, is estimated to add more than $1 billion to the local economy over the next several years, according to the report. It is also expected to add more than 1,200 permanent jobs and produce about 1,000 construction jobs. The area’s labor force has declined by 1.2 percent year-over-year as of June, resulting in an unemployment rate of 4.9 percent. Witten predicts that incomes will expand over the next five years, outpacing the national average.
The new jobs will be important because New Haven County, like other areas in the state, does not see much positive absorption when there are not a lot of job starts. The apartment market also stands to benefit from a slowdown in construction. About 900 units are forecast to be completed this year, which is slightly down from 2004’s numbers. Rising interest rates and increasing construction costs will help slow the pace of construction.
Witten characterized the long-term outlook for rental market demand as “very positive.” Baby boomers and their children, he noted, will both be entering years where renting is common and higher interest rates will curb the number of renters who become homeowners.
“With nominal construction starts, excellent base industries, historically high occupancy and a healthy rental growth, New Haven County Connecticut remains at the top of many apartment buyers’ lists of preferred markets,” according to Witten’s report.
Vacancy for the second quarter in New Haven Harborside was 6.4 percent with asking rents at $946 per month, according to the report, while North Haven/Wallingford/Meriden saw vacancy at 3.6 percent and rents up to $1,083. Metro New Haven’s vacancy rate was 5 percent while asking rents have reached $971 per month. Owners can anticipate rent growth to accelerate, with average asking rents rising to $960 per month by the end of the year.
The report indicates that in 2004, 2,032 units in New Haven County changed hands for a total of $128.6 million, while in 2005, through August, 1,156 units changed hands for $62.6 million. One such sale, that of the Briarwood Hills apartment complex, happened in May. Witten and his partner, Victor Nolletti, were the sole brokers in the $13.5 million sale. The price per unit – about $77,000 each for the 176 one-bedroom units and single-bedroom lofts – was precedent-setting for New Haven County, according to Witten.
‘Really Impressed’
Meanwhile, multifamily development is continuing in Bridgeport, with New York City-based Urban Green Builders converting the historic Citytrust Bank property on Main Street into 118 market-rate apartments. The company decided to invest in Bridgeport after visiting the city.
“The second we saw Bridgeport, we were really impressed with its potential,” said Nnenna Lynch, Urban Green Builder’s project manager.
The city is considered to be in a good location, given its proximity to New York City, and the apartments will be near the Amtrak and Metro-North station.
The four-building apartment conversion project will involve gutting the interiors of the buildings, keeping only some historic details. There will be 30,000 square feet of commercial space on the ground floor. The project should be finished next summer, Lynch said.
Another New York City-based company, Midtown Equities, is also developing a large mixed-use project on Bridgeport’s Steel Point peninsula, which once housed a power plant. Midtown Equities, along with Miami-based RCI Marine, are proposing to turn the peninsula – some of which is a brownfield – into $1.2 billion worth of retail shops, restaurants, offices, housing, a hotel/conference center and a marina. The project also includes a streetcar loop that will connect it to Bridgeport’s Intermodal Center and downtown, and is located close to Interstate 95.
The firms have taken time to decide on the best mix of uses, and are planning for 2,500 residential units, with a mix of condominiums and apartments. They will be priced in the mid to upper ranges, and every building that houses residences will be unique, incorporating different heights and styles.
In Bridgeport, vacancies now stand at 4 percent, which is below the high reached during the second quarter of 2003.
After years of appreciation in other markets, with the Naugatuck/Waterbury area lagging behind, apartment owners there can now look forward to improvement, with asking rents increasing 4 percent, according to the report.
“Waterbury, the valley market, [and] areas like that did not experience the kind of appreciation and rent increases that other markets did,” Witten said.
Second-quarter vacancy in Waterbury was 3.9 percent and asking rents increased at 0.5 percent to $854 per month.
Witten predicted, however, that other markets – such as the Metro New Haven and North Haven/Wallingford/Meriden markets – will see flatter rents.
