Between the launch of the Hartford Line and welcoming new businesses to downtown, 2018 has been a strong year for the Hartford submarket. Appealing to both young professionals and empty nesters who crave walkable communities with easy access to public transit, highways and retail, Hartford has become an increasingly popular area to live, thanks in part to a wide array of cultural amenities and a citywide focus on improved walkability.
In October, The Hartford Courant reported there were more than two dozen developments underway in Hartford, including the addition of hundreds of new apartment units. Among Hartford’s newest multifamily units are vacant office buildings which have been converted into studios, as well as one- and two-bedroom units.
Hartford Business Journal reports development is not confined to the city’s urban core, with new multifamily developments – ranging from conversions to scratch builds – popping up in suburban communities along the I-91 corridor. Further, development in Hartford has expanded beyond the central business district and into the Parkville neighborhood.
“Hartford is an attractive submarket for New York City developers and investors who are looking for a market with lower costs and strong revenue-generating potential,” Taylor Perun, senior associate in the firm’s Connecticut office, said. “Over the past few years, we have seen an increasing number of investors exploring opportunities in the area after being priced out of competitive nearby markets such as Boston and New York.”
The Capital Regional Development Authority (CRDA) reports occupancy rates are sustaining 95 percent or higher, and that the market has been supporting annual rent increases over the past three years. In April 2018, CRDA reported that 881 new apartment units had been added in Hartford since late 2013. Most recently, CRDA reported an additional 650 market rate units are under development or in the planning stages in Hartford.
Among Northeast PCG’s multifamily investment opportunities in Greater Hartford are Bedford Gardens, an 84 unit portfolio being offered at a cap rate of 8 percent and The Hartford Portfolio, which boasts 125 units and is trading at a cap rate of 8.5 percent.
A look at investment real estate in Western, Mass.
Similar to the Hartford submarket, adaptive reuse has helped pave the way for new multifamily development in Western, Mass. In Pittsfield, the former Holy Family Church was converted into lofts while the Cabotville Mill in Chicopee will soon house 600 apartments. Other adaptive reuse projects in Western, Mass. include efforts to replace the former Registry of Motor Vehicles in Springfield with a commercial development and the $200 million Eastfield Commons mixed use development taking shape on the grounds of the Eastfield Mall (which is reported to be a similar lifestyle concept to West Hartford, Conn.’s Blue Back Square).
Driving increased demand for workforce level housing in Western, Mass. is the newly opened MGM Springfield, which in its first five weeks brought $42.5 million in net revenue into the region. A further sign of economic promise, MassLive notes public and private investment in the City of Springfield totals more than $3.76 billion since the tornadoes struck in June 2011. Notable projects/investments include the CRRC rail car factory, MGM Springfield casino and the renovation of Union Station. Among Northeast PCG’s investment opportunities in the Springfield submarket is Berkshire Arms Apartments, a 16 unit multifamily portfolio being offered at a cap rate of 9.8 percent.
“New development, redevelopment and the new rail line are all positively impacting the investment real estate market in Western, Mass.” Perun noted. “For investors willing to undertake an adaptive reuse project, in particular, there are several opportunities to buy at or below market value and create the conditions to maximize returns.”
For further market analysis including Hartford, Springfield, Boston, New York’s Hudson Valley and Rhode Island, download a free copy of our 2018 Building Sales Report.