With two months until the New Year, 2014 has shaped up to be the best year for Connecticut investment sales since the Great Recession. Over the past months, Northeast Private Client Group has closed a number of multifamily and retail transactions at aggressive values, including:
- 88-unit multifamily portfolio in New Haven, CT, which traded for $6.7 million — more than $76,000 per unit, a capitalization rate of 7.0% on current net operating income
- 78-unit multifamily portfolio in New Haven, CT, which traded for $4.5 million — nearly $58,000 per unit, a capitalization rate of 7.25% on current net operating income
- 56-unit multifamily portfolio in Bristol, CT, which traded for $3.75 million — nearly $67,000 per unit, a capitalization rate of 7.4% on current net operating income
- 14,000 square foot multi-tenant detail strip in Southbury, CT, which traded for $1.9 million – nearly $136 per square foot, a capitalization rate of 9.0%
- 19,000 square foot multi-tenant detail strip in Killingworth, CT, which traded for $3.25 million – nearly $175 per square foot, a capitalization rate of 8.4%
Not surprisingly, multifamily properties continue to command the most aggressive values, with recent trades in the New Haven and Bristol submarkets closing at capitalization rates in the 7.0-7.4% range. The Connecticut apartment market in 2014 has been driven by consistently strong occupancy rates, coming in at 96.0% state-wide, combined with above-average rent growth in submarkets along the I-95 corridor.
Pricing for multi-tenant retail assets may range from 6% cap rates for long-term net-leased properties to the 8-9% range for un-anchored multi-tenant strip centers. Retail rents and occupancy continue to firm up going into 2015.
Beyond the multifamily and retail markets, it’s been a bumpy road for Connecticut office and industrial properties as they continue to rebound from the Great Recession and contend with a weak labor market. A recent article published by the Fairfield County Business Journal noted that these markets have stabilized into a “new normal” some 30% below pre-recession leasing activity.
The most attractive properties are those that have been updated and are located near transportation or those that meet “medical ready” requirements and can be readily leased to medical practices. On the other hand, aging buildings and large footprint Fortune 500-type corporate offices don’t offer the amenities and space efficiencies that today’s businesses are seeking today. This means that large office buildings are no longer likely to be filled with a single tenant. At the same time, there continues to be more and more co-working spaces popping up to meet the demand for small, cost-effective, cooperative-like working arrangements.
With offices in Connecticut, New York and Massachusetts, our investment sales teams at Northeast Private Client Group are well-positioned to support commercial real estate investors looking at opportunities across the region. If you’re a property owner or an investor in the mid-market segment and want to discuss this blog or your investment goals and how we can help you achieve them, please give us a call. We look forward to listening and sharing our knowledge with you.