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April 3, 2023 Deal Watch

Hot Hartford apartments market draws diverse mix of residents, including many from outside city

HBJ PHOTO | MICHAEL PUFFER Dan Lyons, from Winthrop, Massachusetts, spends a few nights weekly in a downtown Hartford apartment while fitting out a new restaurant/live entertainment venue on Pratt Street.
By Michael Puffer

For the past six months, 37-year-old Dan Lyons has split his time between a condo in a seaside suburb of Boston and an apartment in a recently redeveloped, century-old former office building in downtown Hartford.

Lyons’ $1,200-a-month studio apartment is around the corner from Hartford’s historic Pratt Street retail strip, where Lyons and his family are outfitting a new restaurant/live entertainment venue.

The “Lyons Den” is anticipated to open this summer.

The apartment has a tin ceiling, exposed brick wall and access to three floors of common amenity spaces including a TV lounge, commercial-sized kitchen/dining room and game room with pool and ping-pong tables.

“I’m currently the undefeated ping-pong champion,” Lyons joked.

Lyons said he is considering moving to a larger space in the recently completed Sage Allen Apartments in a few months when his wife, Jen, and their daughter join him full time in Connecticut. He is among a wave of new arrivals gravitating to thousands of apartments added to Hartford’s downtown over the past decade.

Downtown landlords say their new apartments attract a diverse mix of residents — both in age and background — with many, and sometimes most, tenants coming from outside Hartford.

Lyons said he’s witnessed that diversity first-hand in his 32-unit building at 196 Trumbull St. Some, like him, rent and stay a couple nights a week.

Others are students. A few speak German.

“From what I can see most are new to Hartford,” Lyons said.

Kevin Kenny is vice president of Hartford-based apartment developer and manager Lexington Partners, a partner in the redevelopment of 196 Trumbull St. His company owns or manages 841 apartments in eight downtown Hartford buildings.

Forty-two percent of residents in those buildings had out-of-state zip codes prior to moving to Hartford, said Kenny, who was a panelist at Hartford Business Journal’s recent “Future of Downtown Hartford” real estate forum.

Most out-of-state tenants are coming from New York City, Boston or areas around those metros. Many move to Hartford to be closer to nearby family, while also maintaining an urban lifestyle, he said.

“We have options for offering twice the space for half the rent they were paying,” Kenny said.

HBJ PHOTO | MICHAEL PUFFER
Lexington Partners Vice President Kevin Kenny in a communal cooking space at 196 Trumbull St. in Hartford.

There is work to do to maintain momentum and interest, Kenny added. He described downtown’s current nightlife scene as “pretty dismal.”

Lexington is trying to change that by filling first-floor empty spaces in its apartment buildings with new retailers, restaurants and bars — including the Lyons Den. Kenny said he’s been involved in recruiting nearly a dozen businesses to downtown Hartford over the past year, with help from the city’s Hart Lift incentive program. Those merchants — ranging from a candy store and comics book shop to a tattoo parlor and soul food restaurant — will debut in the coming months.

High occupancy rates

Capital Region Development Authority Executive Director Michael Freimuth has been a key player in Hartford’s recent apartment developments. His quasi-public agency provides gap financing — largely in the form of low-interest loans — to make apartment deals “pencil out.”

Freimuth, also speaking at HBJ’s March 14 real estate forum, said the city had about 700 apartments in its downtown eight years ago when CRDA began its campaign to add new units. Today, there are about 3,400 center-city apartments, 650 more in construction and between 500 to 1,000 in various stages of planning, he said.

While demand remains high, there are economic headwinds — including rising interest rates and higher operating, labor and construction costs — that are making new Hartford apartment developments more difficult to get off the ground, Freimuth said.

CRDA-backed apartments have been well received so far, Freimuth and others said, with occupancy rates in most properties over 90%.

“We are seeing people come from the tri-state area, it’s not just people moving from the suburbs to downtown,” Alan Lazowski, CEO and co-founder of LAZ Parking and a prominent Hartford-based real estate investor, said during HBJ’s real estate forum. “We have people from New York, Massachusetts, Rhode Island — they are coming into this city. Our occupancy rates on all apartments are over 92% and it’s really a phenomenon. People say ‘if you build it, they will come.’ Well, they have come.”

Hartford has pushed hard to add market-rate apartments to boost downtown activity and vibrancy. The effort has become ever more urgent since the pandemic led to wider adoption of hybrid or remote work, shrinking office workers’ economic impact on downtown’s restaurant and retail scene.

Lazowski is among those who believe downtown can sustain many more apartments.

“We would love to get an additional 5,000 apartments downtown and I think that’s part of what will make the vibrancy happen,” Lazowski said.

Younger demographic

Randy Salvatore, CEO of RMS Cos., is putting the finishing touches on a 270-unit apartment building adjacent to Dunkin’ Park, near the northern edge of downtown Hartford. He aims to add about 700 more units on other vacant lots around the ballpark, but that effort has been put on hold as the city duels in court with another developer claiming those development rights.

Salvatore said 225 units in “The Pennant” building are rented, and he expects full occupancy in about two months. His tenants include a mix of all ages, with about 75% coming from outside Hartford, he said.

“Which is great, because it’s increasing the population in the city, which creates vibrancy,” Salvatore said. “So, we are really excited about that, as opposed to people just moving from building to building within Hartford.”

Bruce Becker, the eco-friendly developer who led the $84.5 million conversion of the former Bank of America tower at 777 Main St. into 285 apartments, said his Hartford units don’t stay vacant very long; they are currently 98% occupied, according to CRDA.

“It seems fewer and fewer people want to leave,” Becker said. “(The apartments) are in high demand right now, which is great.”

Becker said he’d love to see a supermarket added to downtown, along with additional retail and restaurant options.

“The thing that is surprising is people do not realize how attractive downtown Hartford is, retailers don’t appreciate it,” Becker said. “A lot of our tenants are going to West Hartford for high-end grocery stores and restaurants when the market is in Hartford.”

777 Main saw a dramatic drop in occupancy at the outset of the COVID-19 pandemic and then rapidly rebounded, noted property manager Stacey Griffeth.

That’s a dynamic shared by many of the newer and nicer downtown apartment buildings, she said.

777 Main accommodates a diverse mix of tenants, including students, but the age range has skewed toward a younger demographic since the COVID-19 rebound, Griffeth noted. Pre-pandemic, most residents were professionals in their 40s or 50s, she said.

“Now we have a much more millennial demographic, our age group is primarily 25 to 35, according to our survey,” Griffeth said. “Most folks are coming in for new positions, lots of job offers in the area.”

Sara Fette, 30, moved into 777 Main a little more than a year ago. It was close to her marketing job in Glastonbury, and now even closer to her new job with Hartford health insurer Aetna. The move also got her out of her parents’ Watertown home, which, she said, “is surrounded by farms.”

“I like the closeness of everything,” Fette said. “Everything is in proximity. I like the hustle and bustle of the city. I like that there are so many businesses here.”

Fellow 777 Main resident Jeffery Hoffman, 57, moved into the building in January. He has worked in and around Hartford as an IT professional for various companies for decades.

Hoffman, who moved from New Britain, said he was sold on the building’s historic charm, amenities and energy-saving and environmentally friendly technologies.

Hoffman works for a New Jersey-based IT company servicing companies in New York. So, he also enjoys the fact the city’s train station is a short walk away.

The building is also pet friendly. Hoffman has a 12-year-old Bichon Frise-poodle mix named Coco.

Hoffman said he has followed Hartford’s development efforts over the decades and believes adding new apartments is a winning strategy.

“I think Hartford will attract professionals like myself and young professionals if they keep” adding more apartments, Hoffman said.

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