Downtown apartment leasing loses momentum Getting back on track may depend on the subsiding of COVID-19 worries
Downtown apartment leasing loses momentum
Getting back on track may depend on the subsiding of COVID-19 worries
In a recent tour, property manager Laurie Waddell, left, and assistant property manager Kaitlyn Delehoy walk the first floor of one of three loft-style apartments at the refurbished 101 Pearl Street tower in downtown Hartford. (Mark Mirko/Hartford Courant )
By Kenneth R. Gosselin
Hartford – The 100 new apartments at the prominent corner of Pearl and Trumbull streets in downtown Hartford leased at dizzying pace last year, filling up in just four months.
So when another 160 rentals in the building next door were ready for tenants this spring, expectations of a six-month lease up were high. But no one saw a global pandemic creeping toward Hartford.
“Did I expect to be further along?” Jeffrey D. Ravetz, a New York developer who partnered in the conversion of the two vacant office buildings to apartments, said. “Of course. My leasing should have gone as well or better.”
The pandemic overall slowed the pace of apartment leasing downtown throughout the spring, traditionally a crucial season for attracting new tenants. And while there were nascent signs of an uptick in leasing in June, Ravetz said he can’t forecast the trajectory of renting going into the summer, which is usually slower. The pandemic may have altered typical leasing patterns, he said.
Pearl Street also will soon have more competition for tenants looking to move into brand new downtown apartments. Two other conversions of former commercial space into rentals, at 103 Allyn St. and nearby at 28 High St. will soon bring 100 more units.
The addition of more than 1,500 apartments in and around downtown since 2015 — the majority of them with some public financing — is seen as critical to downtown’s revitalization, attracting millennials and thus, the employers that want to hire them. Young professionals have wanted to work close to where they live, often going between home and office on foot.
How, or even if, the pandemic will change that dynamic is not yet known. But apartment leasing downtown is being closely watched.
Michael W. Freimuth, executive director of the quasi-public Capital Region Development Authority, said the three apartment projects, plus a fourth at the former Colt gun making factory at the edge of downtown all will have launched leasing during the pandemic.
“Those 300, we’ll see what happens,” Freimuth said. “They are going to tell us the story. If they get absorbed real quick, guess what? On the other hand, if the absorption is slower than we hope, or rents have to be discounted, or perhaps other buildings start to have lower occupancy because there is a shuffle going on, those are going to be indicators to us.”
All four projects have some CRDA in their financing. CRDA has committed tens of millions of dollars in state taxpayer-backed loans and equity investments to apartment projects in the city, with some of that already having been repaid.
Apartment projects partly financed by CRDA – including 777 Main, 179 Allyn and 370 Asylum – have consistently logged 90% or better in occupancy after initial lease-up. Freimuth said some have fallen into the high 80% in the pandemic, but overall, the properties are holding at 90% or better, and are securing renewals, Freimuth said.
Rents, he said, also have been relatively stable after modest increases in recent years. Landlords are seeing operating costs – utilities, in particular – rise as people work from home and cleaning regimens have intensified.
At 101 Pearl – joined together with neighboring 111 Pearl that leased so quickly into the “Spectra Pearl” complex – a recent tour revealed clean, modern European-influenced lines. The design also was the hallmark of both 111 Pearl and the first conversion project in downtown Hartford by Ravetz and his partner Joseph Klaynberg, both of New York: the conversion of the long vacant hotel on Constitution Plaza into rentals.
Despite the pandemic, Ravetz remains upbeat about his latest project. Four months in, 45 leases have been signed – 13 with move-in dates in July or August – for about 30% of the building.
The strategy for 101 Pearl rested heavily on smaller studio apartments – accounting for about three-quarters of the rentals – and different amenities on each of its 13 floors. The thought was that millennials and young professionals want to spend less time in their apartments, and more in commonly-shared spaces.
Studios range in size from 367 to 485 square feet, with rents of $1,004 to $1,284 a month, plus $110 a month for a parking space and a $550 annual amenity fee.
The building has a rooftop deck and lounge, a game simulator allowing residents to swing a golf club or shoot a hockey puck, a bocce ball court and a video gaming room with virtual reality options; a gym; and an art studio, among others.
Ravetz said the amenities may now be a “bit of a double-edged sword” in times of social distancing, but he maintains they will be a big attraction for tenants in a world after COVID-19.
“I think what’s going to happe – -people are not going to avoid congregating,” Ravetz said. “In fact, there will be the opposite effect. That once they have the equivalent of a green light, people are going to overcompensate for the lack of congregating that they’ve been able to do in the last six months.”
“People just have to regain their comfort,” Ravetz said.
Lost momentum?
Prior to the pandemic, there were several ambitious redevelopment plans of downtown Hartford, including a $100 million redevelopment along the Pratt Street corridor and even more ambitious, a $200 million project around the city’s minor league ballpark.
Martin J. Kenny, a developer active in downtown Hartford for decades and a partner in the mixed-use Pratt Street project, said there is no way to sugar-coat it: apartment leasing downtown has lost some of its momentum.
The atmosphere is different, he says, has changed dramatically from before the pandemic. Office workers are still largely working from home, and that could continue well into the fall. For weeks, restaurants were closed, only reopening in the past month.
“Short-term is not great,” Kenny said. “There’s no kidding about it. It’s a little depressing right now. You don’t see any people going to work so it’s desolate. The foot traffic is really slow, and people look kind of creepy in those masks.”
Kenny said he is still very enthusiastic about the Pratt Street project, which also encompasses the Lofts at Temple and Main at the eastern end of Pratt and the student housing behind it, plus the vacant, Talcott Street garage.
But he says it is hard to say when the fallout from the pandemic will subside.
“The city was on quite a roll, and [Hartford Mayor Luke Bronin] was feeling his oats before this happened,” Kenny said. “But I think it will pick up once there is certainty, and people feel safe again. There is a lot of new living product in downtown Hartford with a lot of amenities. So I think it’s going to be attractive.”
In addition to other apartment projects in the pipeline, the long envisioned redevelopment of the intersection of Park and Main streets is moving forward, its financing now complete. The 126 mixed-income apartments are now expected to be ready for tenants in mid- to late 2021.
A groundbreaking is still expected this year for the first phase of Downtown North, the area around Dunkin’ Donuts Park.
Colt conversion
One bright spot in apartment leasing throughout the pandemic has been at Colt in the conversion of the decaying North Armory into 48 apartments.
Since it began leasing on April 1, 77%, or 37 of the apartments have been rented, according to Larry Dooley, owner of CG Management Co. and co-developer of the sprawling former Colt complex.
“Not bad for April 1 considering April 1 wasn’t a good date for anyone in business,” Dooley said.
Dooley said he believes part of the attractiveness – even in the pandemic – is Colt offers more space: surface parking, wider hallways opening into apartments and rentals that are a little bigger than in the heart of downtown.
“The thing that I have noticed is the apartments that are most prized are a little bit larger, not too expensive,” Dooley said. “The one-bedroom with a den is very popular. I think people are looking for a little more space and a little more separation.”
Dooley said asking rents have held up and is even a bit higher than when the project got underway.
One bedrooms are between 779 and 963 square feet with rents ranging from $1,575 to $1,925, he said.
What he has seen in demand in recent months is making him rethink the conversion of a former classroom building on the Colt campus – known as the U-Shaped building after its shape – into apartments.
“I’ve actually modified the design to go with – I think I only have one studio in the entire building, Dooley said. ‘I’m going more to the one bedroom, the one bedroom with a den. It seems like a little more space seems to be in order now.”