In one of the first significant multifamily sales of the year, two Middletown apartment communities have been sold for $73.25 million.
The price for the two complexes – which have 280 and 238 units – is in line with similar deals that are under way, according to Steve Witten, a broker with New Haven-based Marcus & Millichap.
The sale also kicks off a year that Witten and his partner, Victor Nolletti, predict will be a good one for the multifamily housing market. Witten and Nolletti, who wrote a year-end review and outlook for 2006, are forecasting the state’s apartment fundamentals to remain steady over the coming year. They say asking rents will increase by 3 percent to 5 percent, and vacancies will decrease by 1 percent to 1.5 percent.
The recently sold apartment complexes, Windsor Brooke and Windsor Ridge, are Class A communities and were bought by Fairfield Residential LLC.
‘Positive Momentum’
The outlook for the areas near the complexes is good for the coming year, according to the Marcus & Millichap report. New jobs are expected in nearby New Haven as the construction gets under way on the $430 million Yale-New Haven Hospital Cancer Center, which the state approved in early September. The center is expected to create more than 500 jobs, in addition to 350 construction positions. New Haven itself has a growing student population – most of whom are renters – and a lack of single-family construction, according to the report.
To the north of Middletown, Hartford County is experiencing a steady stream of high-paying jobs as insurance companies continue to do business there.
To the southwest, New London County is poised to be a bright spot in 2006.
“In New London County, there have been reductions in goods-producing businesses, but not as severe as those experienced in other parts of the country,” according to Witten and Nolletti’s report. “Workers in goods-producing industries earn some of the highest average wages in the county at $62,000 per year compared to $37,000 for all industries.”
The closure of the naval submarine base in Groton – one of the region’s biggest employers – is no longer an immediate threat, and there remains potential for movie studios and a theme park in Preston.
“There’s a great deal of positive momentum in New London County, which will only result in increased occupancy levels and rental growth for the regional apartment market,” according to the report.
The predicted strength of the state market throughout 2006 is also due to the echo boomers who are changing the demographic profile of apartment communities. That, combined with some new construction, makes Connecticut ripe for continued long-term growth in occupancy and rental rates.
“Overall, the Northeast – primarily Connecticut, Rhode Island and Massachusetts – remain at the top of many investors’ lists as preferred markets for multifamily investment,” according to the report. “Rent fundamentals remain quite strong and with nominal new construction the Northeast will continue to outpace most other national markets in rent growth and overall appreciation in value.”
The sale of the Middletown apartment complexes, which was handled by CB Richard Ellis/New England, is an indicator of the strength of the Hartford market, according to Simon J. Butler, a senior vice president and partner who worked on the transaction.
Both complexes are garden-style apartment communities and are about three-quarters of a mile from I-91, which offers easy access to both Hartford and New Haven. The communities are a five-minute drive from each other. The neighborhood is a well-planned residential district at the northern edge of Middletown. Downtown Hartford is a 12-mile drive north on I-91. Additionally, the properties are within close proximity to numerous retail amenities along both Route 372 and Route 3.
Windsor Brooke was built in 1989 and has eight 2-, 3- and 4-story garden-style buildings, a single-story clubhouse and a single-story maintenance building on about 20 acres. The buildings are wood-frame construction with concrete slab foundations, vinyl exteriors and asphalt shingle hip roofs.
Amenities in the complex include a swimming pool with sundeck, carports, a picnic area and laundry facilities in the clubhouse.
Windsor Ridge was built in 1988 and includes nine 2-, 3- and 4-story garden-style buildings, a 2-story clubhouse and a maintenance building on about 12 acres. The buildings consist of wood-frame construction with concrete slab foundations, vinyl exteriors and asphalt shingle hip roofs.
Brokers at CB Richard Ellis/New England represented the seller, GID Investments Advisers, and procured the buyer.
