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April 19, 2021 Deal Watch

Dakota Partners eyes groundbreaking on Newington apartments, two multifamily developments in Hartford

RENDERING | CONTRIBUTED Dakota Partners is working to put together financing for a 180-apartment development called Edge 400 next to the former Bow Tie Cinema in Hartford.

Dakota Partners has been one of the most active apartment developers in Greater Hartford over the past five years, and despite some challenges presented by the COVID-19 pandemic, the Waltham, Mass.-based firm remains as focused as ever on the region.

That’s according to Dakota Partners co-founder and President Roberto Arista, who in a recent interview detailed his firm’s pandemic experiences of the past year and its future plans for Greater Hartford.

“We are definitely looking to do more projects in and around the Hartford area,” Arista said.

Roberto Arista

Dakota already has a number of them on its plate.

A long-delayed apartment project, Cedar Pointe, is now headed toward a potential construction start this summer, after it was recently awarded $1.9 million in low-income housing tax credits from the Connecticut Housing Finance Authority and a $4 million loan from the state Bond Commission.

Dakota’s application in last year’s annual round of tax credits was unsuccessful, pushing back the project start date. The $26 million first phase includes 72 affordable units. Dakota hopes to build another 36 units at a future date.

Dakota is also working to put together financing for two other projects in the Capital City, one of which has not been previously reported.

The firm recently inked a purchase agreement for a mill property at 287 Homestead Ave. Built in the 1920s, the mill houses the Smith Worthington Saddlery Co. The owner of that business and of the mill itself, Curtis C. Hanks, died last year.

Arista said Dakota has approached the Capital Region Development Authority (CRDA) about potential financing options for a market-rate apartment project, tentatively called Saddlery Lofts. If CRDA isn’t interested, Dakota will likely develop a mix of affordable apartments at the site, delaying the project’s start date to 2022, Arista said.

Though Dakota has built market-rate apartments, including in Hartford, the majority of its developments, which are spread across New England and in Virginia, are affordable under federal formulas.

The upscale market-rate multifamily market has been active during the pandemic in this region, but Arista said the need for affordable apartments remains as strong as ever.

“The demand for affordable is always there, it’s a constant,” he said.

In addition to Saddlery Lofts, Dakota is also talking to CRDA about its proposal to build three apartment buildings containing a total of 180 units next to the former Bow Tie Cinemas on New Park Avenue in Hartford’s Parkville neighborhood.

That project, which Dakota is calling Edge 400, first came to light last October when the firm sought permission from the city to subdivide the property around the theater.

There’s more work ahead, but if CRDA is interested, it could mean a construction start as soon as late fall, Arista hopes.

Pandemic’s impact

The COVID-19 pandemic spurred massive job losses when it struck New England early last year.

Whereas many office and other white-collar workers simply started working from home with their financial situation unaffected, employees of restaurants, hotels and other service businesses took it on the chin.

“The service workers have been decimated and those tend to be the people who occupy our spaces,” Arista said.

Across Dakota’s multistate apartment portfolio, its occupancy and rent collection rates, which are both usually around the 95-97% mark, fell to about 90% or slightly below that, Arista said.

“So we did take a hit, but it wasn’t significant,” he said. “We had been bracing ourselves because we had no idea what would happen.”

He’s further encouraged by the continued rollout of COVID-19 vaccines as well as the recently passed $1.9 trillion federal stimulus law. The American Rescue Plan contains billions of dollars for states to assist low-income tenants cover their back rent.

Dakota’s Columbus Commons project in New Britain, which the firm developed with Xenolith Partners, debuted its first 80 apartments in March 2020. Despite the timing, Arista said the lease-up has gone well, with apartment occupancy at nearly 99%, though brokers are still seeking tenants for approximately 11,000 square feet of first-floor retail space.

Besides economic impacts on renters and consumers, the pandemic also created price spikes and shortages for some construction materials and appliances.

“It didn’t really hurt our projects, but it did extend our lead times,” Arista said.

Dakota still managed to recently complete its 144-unit Oak Tree Village apartment project in Griswold, which broke ground early last year before the pandemic hit.

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