The addition of nearly 1,000 new apartments over the next few years could be what downtown Hartford needs to secure a long-elusive vibrancy beyond the work week.
Five apartment projects are now underway — four conversions and one new complex— and the first of this wave of new rentals are expected to be ready by early fall. Work on an additional half-dozen apartment projects could begin in the next year.
The stakes are high for downtown Hartford. More apartments would foster greater street activity at night and on weekends and provide a key element to revitalizing the city.
Now, finding an apartment downtown isn't easy. The new units are intended to ease the crunch and provide more housing for an expected influx of thousands of state workers and more college students. Developers are also banking on the national trends of people moving back to cities, young people delaying home purchases and baby boomers downsizing.
But the market for another wave of new apartments — mostly studios and one-bedrooms — is untested.
And there may be competition: a similar apartment building boom is happening in surrounding communities. Some of those complexes, less than 10 miles from downtown, could woo away tenants concerned about safety and limited access to amenities such as grocery stores.
Michael W. Freimuth, executive director of the Capital Region Development Authority, said he believes downtown will be in a strong position to compete for tenants. Right now, potential tenants are skipping downtown altogether because of the shortage of rentals, he said.
"You ask where all these people are coming from," Freimuth said. "They may already be here."
One of them is Katherine Donovan, who has been frustrated in her search for an apartment for nearly a year. A senior audit associate at the downtown office of Whittlesey & Hadley, Donovan now lives at her parents' home in Suffield. She wants to find an apartment with a rent where she has enough money left over to save for a down payment for a house.
Donovan likes spending time at Bushnell Park, and the views of the city from her office in the 280 Trumbull tower are appealing. There are plenty of restaurants and night life attractions.
What she really wants to do is eliminate the daily half-hour-to-45-minute commute each way.
"I'd like to be able to walk to work," Donovan, 25, said. "But I'm starting the look outside of downtown."
1,500 And Counting
Downtown Hartford now has nearly 1,500 apartments and a vacancy rate that hovers between 3 percent and 4 percent. Vacancy rates at the newest apartment complexes built a decade ago — Hartford 21, The Lofts at Main & Temple, Trumbull on the Park and others — are all in the low single digits.
CRDA, the driving force behind most of the apartment projects downtown, is betting $60 million in taxpayer-funded loans and other investments on the new rentals. The average amount CRDA is spending per unit is $60,000, or roughly a quarter of the cost.
Aside from demographic trends, Freimuth said there are major sources of tenants in the pipeline: The University of St. Joseph wants 100 apartments for its downtown pharmacy school and the University of Connecticut is establishing a Hartford campus.
On top of that, 3,000 state workers will be transferring to offices downtown in the next couple of years. With expected retirements, younger workers coming on the payroll could become potential renters downtown, Freimuth said.
"If I get just 10 percent of them, that's 300 units," Freimuth said. "These are all things that aren't being measured."
Of the apartments now planned, 200 also are set aside as "affordable," meaning they will have restricted, lower rents for tenants meeting income guidelines.
"We'll rent those before I can breathe," Freimuth said.
Some experts say apartment construction in the past decade has lagged behind demand. But they are concerned that too much building could flood the market, pushing down rents. While that might benefit tenants in the short-term, it would stress landlord budgets, leading to less upkeep, a strain on building values, and a slice into property taxes the city is counting on.
"It's an untested market and how robust it turns out to be has yet to be seen," said Donald J. Poland, senior vice president of urban planning and the commercial real estate services firm Goman + York in East Hartford. "We're a slow-growth state, a slow-growth region."
What worries Poland and others are industry statistics that show the downtown Hartford rental market can count on, at most, a dozen, new apartments being occupied a month, or about 120 a year, after all moves in and out of apartments have shaken out.
Freimuth said the numbers don't necessarily reflect the true demand for apartments downtown.
"That's historically what it has been," Freimuth said. "But is the supply big enough to get a true measure of what the downtown Hartford market is?"
'Burbs Adding Units Too
In the towns surrounding Hartford, large-scale apartment construction has languished for decades. One developer estimates that 70 percent of all rentals in Hartford County were built before 1985 and are showing their age with dated fixtures and finishes.
But that will soon change dramatically. More than 1,500 units are expected to come online by mid-2016 in Glastonbury, Windsor, Rocky Hill, West Hartford, Simsbury and Bloomfield.
Windsor, which hasn't seen large-scale rental development in 35 years, has three major project in the works. Two of the developments are in commercial areas and a third is near a train station, intended to capitalize on mass transit.
The largest, which could add 3,500 rentals over the next 20 years, would redevelop the former, 600-acre Combustion Engineering property in Windsor into a village of apartments, single-family houses, shops, medical offices, condominiums and open space. The first phase is expected to get underway this summer.
"We want to make sure that we're providing that quality of life, if you will, for corporate entities, so they are able to attract [and] retain employees," Windsor Town Manager Peter Souza said.
With a flat, if not declining, population in Connecticut, successful leasing of new units — in both downtown Hartford and surrounding towns — certainly will depend on the creation of jobs. Across Connecticut, employment gains following the last recession have been slow. In 2013, job growth in the state was half of what it was before the last recession hit, preliminary statistics show.
Town officials say attracting apartment tenants also will rest heavily on amenities and attractions a town or city has to offer.
"We need to create meaningful jobs, places for them to congregate and create their own community, and, in West Hartford, that is what we are trying to do," said Robert Rowlson, the town's business development officer.
West Hartford has already achieved some of those goals with the 2007 opening of the urban-style Blue Back Square, with apartments over retail space. And the demand for apartments in the town has surpassed single-family houses, Rowlson said.
"Apartments are the highest-requested properties that I have," Rowlson said.
Converting The Sonesta
On a recent tour of the apartment conversion at the old Sonesta Hotel on Hartford's Constitution Plaza, developer Jeffrey D. Ravetz leads visitors up 12 flights of stairs to the top floor for a look at the views. (The elevator isn't in service.)
He stops in a corner, one-bedroom unit to take a look at framing. He notices a one-foot-square area of space in the corner of what will be behind a bathroom wall. He asks a construction manager about it. He's told it's dead space.
"You know how much I like dead space," Ravetz said. "Can we do something about that?"
Ravetz, president of Girona Ventures in New York and a partner in the project, said the apartments will be "hip" with European-style finishes, some of the cabinetry imported from Italy. Closets, for example, will more resemble armoires but with a more modern look.
Ravetz is enthusiastic about the prospects for the building — to be called On the Plaza — even more so than when he and partner Wonder Works Construction and Development Corp. bought the old hotel in 2011. Since then, there have been signing of tenants on Front Street, including Infinity Music Hall & Bistro, and the prospect of a UConn campus.
The primary market for units in On the Plaza will be young professionals — singles and couples without children — who work downtown. He expects the lease up to take a year, and he doesn't expect much of a demand from workers in the suburbs.
"You don't get a lot of the reverse commute," he said.
Ten miles to the south, in Rocky Hill, the developer of the upscale Alterra complex, built by Continental Properties, is just as bullish on the prospects for the apartment market there.
Two of the five buildings in Alterra — a total of 60 units — have been filled since opening Nov. 1. The third building, which opened this week, also is 100 percent rented, the result of pre-leasing. The fourth building is 30 percent pre-leased and is expected to open by June. Construction began recently on the fifth building, expected to open in August.
With its sculpture garden, pool with lounge chairs and full outdoor kitchen, Alterra looks more like a resort than an apartment complex near office parks and the interstate. Thoughtful touches abound. All the fixtures — down to the toilet paper holders — are custom-made for Alterra, and even the family dog is taken care of with an outdoor dog-washing station.
"This closet is the size of my first apartment in New York," Marjorie Kaplan, an Axiom Communications publicist working for Continental, said during a recent tour.
Fred Petak, a regional manager for Continental, said the development, just around the corner from the sprawling Century Hills complex, is filling a niche for luxury-style housing.
"We're getting all kinds of people," Petak said. "Hopefully, it continues the way its going."
New apartment construction also is pressuring older complexes to invest in upgrades or lose tenants to newer apartments.
The developers of one older complex are responding by building new units. New Jersey-based The Solomon Organization, which owns Westgate Apartments on Farmington Avenue in West Hartford, is converting underused space into 12 brand-new units. The existing units and common areas, built in the early 1970s, have been upgraded.
Andrew Rosen, managing director of Solomon, said with the old building but new finishes and spacious floor plans, the apartments are a "half-notch" below new construction.
Developer Martin J. Kenny has a stake in both downtown and the surrounding communities. He is confident that his projects in Glastonbury, Bloomfield, Windsor and downtown will fill up. But some trepidation does lurk in the back of his mind, especially if the number of planned units goes above 3,000 and they are all coming on the market at once.
"Are we OK for right now?" Kenny said. "I think so."
The Coveted Tenant
Back in downtown Hartford, Donovan said she prefers to find an apartment with a roommate because her share of the rent would be half of what it would be for a one-bedroom apartment. On top of a lack of choices, she hasn't had a lot of luck finding a roommate.
Ideally, Donovan says, she'd like to budget $1,000 a month, including parking and utilities.
"I'm starting to think about West Hartford, Wethersfield and Rocky Hill," Donovan said. "West Hartford has a lot the same options, with Blue Back Square."
Depending on where tenants look in the towns surrounding Hartford, some realty agents say the best deals might actually be in downtown Hartford.
Becky Koladis, an agent at Berkshire Hathaway Homeservices in West Hartford, said a two-bedroom apartment at The Somerset in Bishops Corner generally goes for $2,100, plus utilities. By contrast, a two-bedroom at downtown Hartford's Bushnell Tower generally goes for $1,700, including utilities. Both rents include parking, she said.
"I think you can get more downtown," Koladis said. "You can bargain more in downtown Hartford."
Donovan said she isn't concerned about too many apartments coming on the market. In fact, she said, it could work in her favor, sparking more competition on rents and tenant perks.
"It would bring the cost down," Donovan said. "There would be some friendly competition."